Crorepati dreams: Here's how much SIP is required to accumulate a corpus of Rs 10 cr

Investment through Systematic Investment Plans (SIP) in mutual funds is rising. While making investments through mutual funds can be easy as it is run by a professional fund manager, accumulating a corpus of Rs 10 crores in 10 or 20 years can be daunting because the target is big. It will require you to systematically put away a large part of your post-tax income every month in a disciplined manner through the ups and downs. In other words, you must understand that the lesser the time horizon, the more SIP amount you will need to invest to achieve your wealth creation goal of Rs 10 crore. 

Aniruddha Bose, Chief Business Officer, FinEdge, said, assuming a CAGR of 12-13 per cent from small and mid-caps (a reasonable expectation to have for a 10-year horizon), you’ll need to invest nearly Rs 4 lakhs per month through SIP’s to achieve this amount. "If that seems like a huge stretch, fortunately, another option is available: you could start with half that sum today and increase your monthly SIP contribution by Rs 60,000 every year for the next 10 years. If you are confident that your investible surplus will increase by Rs 60,000 per month for the next 10 years, this is probably a better option as it’s more sustainable over the long run.” 

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Considering that Rs 4 lakh can be a huge amount for many, one can consider increasing the SIP term. This is because the longer the investment time horizon, the more risk you can afford to take with your investments – and the more risk you can take, the more you will benefit from rupee cost averaging and compounding. For a two-decade investment horizon, experts suggest investing in small and mid-cap-oriented funds with the maximum potential for compounding your money.

For the tenure of 20 years, Bose said, "Assuming a CAGR of 12-13 per cent from small and mid-caps (a reasonable expectation to have for such a long-time horizon), you’ll need to invest between Rs 90,000 to Rs 100,000 every month through SIPs. If that seems like a huge stretch, fortunately, another option is available: you could start with Rs 40,000 per month today and increase your monthly SIP contribution by Rs 10,000 every year for the next 20 years."

Adding to it, Ajinkya Kulkarni, Co-Founder and CEO of Wint Wealth, said, "To generate a corpus of Rs 10 crore, an investor needs meticulous goal-based planning, a diversified investment strategy, and disciplined execution. There is no rule of thumb for asset allocation, as it differs for every individual depending on their financial goals, life stages, and many other factors. We need to make a few assumptions here. Let us assume that the investor is about 30 years old, have her basics (term and health insurance and emergency funds) covered, and the optimistic returns from equity, corporate bonds, and fixed deposits are 12 per cent , 10 per cent , and 7 per cent , respectively. The investor should dedicate the equity portion towards a Nifty 50 index fund with the lowest expense ratio. For bonds, she can choose from carefully evaluated senior secured bonds."