The Systematic Investment Plan or SIP is one of the preferred low-risk investment methods featured by Mutual Funds for low to mid-level income generators to save a portion of their earnings every month. This investment product allows investors to lock their money for a fixed period into a debt or equity-oriented scheme. During this, they will earn a handsome amount of interest over their invested amount. The profit earned completely depends upon the market volatility, which is very high during the present day.
Aspects of Mutual Fund Investments
Many experts, after studying for a long time, have derived that a person interested in accumulating future wealth should start investing in mutual funds as early as possible. Moreover, people should make sure of contributing regular SIPs, not even missing a single one for a long period, which will in the end provide the most benefit with minimized risk. Along with this, Mutual Fund investors can start SIPs with as low as ₹500 per month and later can increase or decrease the SIP amount as per their financial goal.
So, How Can You Earn ₹10 Cr By Investing in Mutual Funds for 20 Years?
Before starting with this phase, we would like to remind you about the risk factors and the high level of tolerance that you will need to accumulate wealth with Mutual Funds. The ratio of how much you are willing to take the risk will define how much you are going to earn.
Now, let’s learn about the scenario in which you are ready to take a high risk to earn ₹20 Cr in 20 years through Mutual fund SIPs. How much you will have to invest monthly in the form of SIP?
“For aggressive investors who seek to accumulate a corpus of ₹10 Crores over a period of 20 years, the amount to invest would depend on the annualized rate of return they can earn on their investment. Assuming an annualized rate of return of 15%, an investor would need to start a monthly SIP (Systematic Investment Plan) of approximately ₹66,000 for 20 years to accumulate ₹10 Crores,” says CA Manish P. Hingar, the Founder at Fintoo.
“ How much to invest to get to ₹10 crores in 20 years depends on many factors- the most important being returns earned- which is not possible to predict in advance, though assumptions are made by Advisors based on past performance of asset classes and their expected behaviour/returns. Now purely in numerical terms, if you invest let’s say ₹1.5 crores and if it can compound at about 10% per annum, you should be able to reach ₹10 Crore in 20 years,” said Mr Abhishek Dev, the CEO and Co-Founder of Epsilon Money Mart.
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So, “if you just do a SIP of about ₹1.3 lacks per month for 20 years and if that grows at 10% per annum you could reach ₹10 crores. So depending on the goal amount, assumed returns and mode of investment, various combinations are possible. However, there is no guarantee that an assumed return will be met and hence regular monitoring of the portfolio in line with market and asset class performance will be required,” he further said.