Savings and investments form the cornerstone of a successful financial plan. In the long run, the goal is to accumulate substantial wealth that can sufficiently cater to your financial goals such as buying a house and child’s education along with comfortable retirement. To achieve this ambitious goal of amassing wealth ranging from 1 crore to Rs 10 crore, a well-thought-out investment plan with a sustained increase in monthly systematic Investment Plan (SIP) investments through mutual funds is the ideal route to take.
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Initially, if you decide to invest Rs 30,000 monthly in SIP and consequently increase this investment by 5% per year, you could expect notable growth in your wealth. The Wealth Conversations November 2023 report from FundsIndia projects an accumulation of Rs 1 crore after 11 years, Rs 5 crore in about 21 years and 5 months, and Rs 10 crore in 26 years and 6 months following this plan.
Observably, the time frame to achieve these targets decreases as your initial SIP investments increase. By increasing your starting monthly investment to Rs 50,000 and maintaining the same 5% annual increment, you would be able to reach Rs 1 crore in 8 years and 4 months, Rs 5 crore in about 17 years and 10 months, and Rs 10 crore in 22 years and 9 months. Similarly, investors can expect to raise their first Rs 1 crore in 5 years and 5 months, Rs 5 crore in approximately 13 years and 5 months , and finally meet the target of Rs 10 crore in 17 years and 10 months.
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But, if you wish to expedite your savings goal even further, a 10% annual increment in SIP investments can significantly lower these time frames. Utilising this strategy, leveraging a 10% annual increase along with a higher initial investment of Rs 50,000 monthly, investors could accumulate Rs 1 crore in 7 years and 8 months, Rs 5 crore in about 15 years and 10 months, and their target of Rs 10 crore in just little over 20 years. With Rs 1 lakh monthly savings, you could expect to accumulate your first Rs 1 crore in little over 5 years, hitting Rs 5 crore in 12 years, and finally achieving the lofty goal of Rs 10 crore in under 16 years.
The calculations are based on assumption of a 12% rate of return. Notably, while equities tend to give higher return over long term, it’s important to consider market variability. Consequently, during certain years, returns could be lower or even result in losses due to this volatility. Nonetheless, extended investments in equity have repeatedly shown to compensate for these fluctuations, making way for substantial wealth growth. Starting a SIP in any large-cap equity mutual fund is one way to meet your financial goals. For those who are more risk-tolerant, diversifying investments in mid- and small-cap funds is also an option.
Evidently, achieving these ambitious savings goals is not unattainable but rather a matter of strategic planning and disciplined investing. The key lies in steadily increasing SIP investments yearly, thereby capitalizing on the power of compounding to help you substantialize your wealth over time.
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In conclusion, the journey to build wealth is a slow yet rewarding process. To expedite your savings goal and reach the Rs 10 crore mark in less time, start investing a little more every month in SIP, but also ensure to increase this investment by a minimum of 5% to 10% every year. Eventually, a disciplined investment approach, coupled with perseverance and patience, will pave your way to financial freedom.
