How to make Rs 1 crore by investing just Rs 5,000 every month (2024)
Many individuals would like to start their investments when they have a large sum to invest. They believe investing a small sum regularly will not help them to meet their ambitious long-term goals. That is why many of them defer their investments indefinitely. However, they would be surprised to know that investing merely Rs 5,000 through a monthly Systematic Investment Plan (SIP) in an equity scheme would help them to create a corpus of Rs 1 crore in a little over 20 years.
Investing via monthly SIP of Rs 5,000
Investing in an equity mutual fund scheme via an SIP is the best way to achieve your long-term goals. Equity has the potential to offer superior returns than other asset classes. It may also help you to beat inflation which is essential to achieve long-term goals. They also enjoy favourable taxation. Now, long-term capital gains tax on investments held over a year is tax-free.
If you can spare Rs 5,000 every month, start an SIP immediately in equity mutual funds. If you need help with selecting schemes, you can check our recommended equity mutual fund portfolios and pick a portfolio based on your risk appetite and SIP amount. If your portfolio manages to offer an annual return of 12 per cent, you would be able to create a corpus of Rs 1 crore in 25.5 years.
However, this is not an ideal way to invest. You should try to increase your investments in tandem with your income.
Increasing SIP amount every year
Let us assume that you may be able to increase your SIP allocation by 10 per cent every year. So, in the first year you will have an SIP of Rs 5,000 per month, in the second year it will be Rs 5,500 (Rs 5,000+10 per cent of Rs 5,000), in the third year it will be Rs 6,050 (Rs 5,500 + 10 per cent of Rs 5,500) and so on.
This will help you to meet your target corpus of Rs 1 core in 21 years. See table below.
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We have assumed an annual return of 12 per cent for calculation.
Keep track of your investments It is important to track the performance of your mutual fund schemes regularly. Review their performance every six months or every year. If the schemes are beating the benchmark comfortably and not lagging their peers significantly, you may continue with your investments in them. If the schemes fail to perform for a year or more, you should examine the reason behind it. If you are not satisfied with the reason, you should consider selling your investments in them and shift the money to a better performer in the same category.
5000/- to turn them into 1 crore? If you can Invest Rs 5000 per month in a SIP - Systematic Investment Plan for 23 years or 276 months with discipline and without missing any payment they you will have the desired amount in your fund account.
Investing a monthly SIP investment of Rs 63,000 for the next 8 years could potentially build a corpus of around Rs 1 crore, assuming an average annual return of 12%.
A monthly investment of Rs 5,000 for 10 years at an expected rate of return of 12 per cent will earn you Rs 11.61 lakh. The gains made by you in this scenario will be approximately Rs 5.61 lakh (Rs 11.61 lakh minus 5000*10*12).
Using the Cleartax calculator, if you make a SIP of Rs 5,000 per month for 30 years for an expected rate of return of 12%. Your wealth will rise to Rs 1.76 crore by the end of 30 years, of which, Rs 18 lakh is your total invested amount and your wealth gained is to the tune of Rs 1.58 crore.
The SIP calculator shows that a monthly investment of Rs 5000 in the direct plan of this scheme would have grown to approx. Rs 30.5 lakh in 10 years. Monthly SIP of Rs 5000 in the regular plan would have grown to approx. Rs 28.6 lakh in 10 years.
Having 50 crore rupees is a substantial amount of money, and it can certainly provide a comfortable and, to some extent, a luxurious life in India. However, the concept of a luxurious life varies from person to person, depending on individual preferences, lifestyle choices, and spending habits.
With a SIP amount of Rs 30,000 with 0% annual increase, the investor will be able to reach Rs 1 crore in 12 years and 4 months. With a SIP amount of Rs 40,000 with 0% annual increase, the investor will be able to reach Rs 1 crore in 10 years and 6 months.
If an investor invests INR 20,000 per month for a period of 5 years, he will be able to earn INR 17 lakh as the overall income generated from SIP. The total investment in the tenure of 5 years will be only INR 12 lakh.
Jiral Mehta, Senior Research Analyst, FundsIndia said that in this strategy, if you invest Rs 10,000 every month, assuming annual returns of 12 per cent, it takes 8 years to reach the Rs 16 lakh maturity amount.
How much is Rs. 5,000 for 5 years in SIP? If you invest Rs. 5,000 per month through SIP for 5 years, assuming 12% return. The estimate total returns will be Rs. 1,12,432 and the estimate future value of your investment will be Rs. 4,12,431.
You aim to invest approximately Rs 20,000 every month towards achieving your Rs 1 crore target. The timeline to reach this goal depends significantly on the returns you earn. While calculating, it is wise to consider the lowest expected returns to achieve realistic expectations.
If someone begins a SIP of 5000 per month for a span of 20 years, at 12% assumed annualized rate of return per annum, your total investment in 20 years is Rs.12 lakh and the accumulated corpus at the end of tenure is close to Rs.50 lakhs.
The famous 15*15*15 Rule states that an investor trying to accumulate Rs 1 crore should consider an SIP of Rs 15,000 per month at 15% for 15 years to get to Rs 1crore. While this approach holds mathematical validity, it may not be suitable for all investors and market conditions.
36,335 per month, you can actually grow your money to Rs. 1 crore in 10 years. At the end of 10 years, you would have invested Rs. 43.20 lakhs as principal and the balance amount will come in the form of returns on the fund.
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