SIP strategy: Way to get your first Rs 1 crore fast from Systematic Investment Plan (2024)

Systematic Investment Plan (SIP) strategy: Know how to reach Rs 1 crore goal fast by investing in a mutual fund SIP.

Systematic Investment Plan (SIP) strategy: Personal Finance experts often say it is hard to reach the first Rs 1 crore corpus through mutual fund SIP. Thereafter, the power of compounding works magically to multiply your wealth in a very quick time. So, is there a way to reach the Rs 1 crore goal fast?

One obvious way to reach the Rs 1 crore goal fast is by increasing the SIP amount in a big way. The second way would be to wait for the rate of return to increase dramatically. While the first option is in your hand, the second is beyond the control of investors. However, everyone may not be in a position to increase the SIP amount in a big way. So the best way is to increase the SIP amount incrementally, say by 5% or 10% annually.

A calculation in FundsIndia’s Wealth Conversation Report December 2022 shows that the number of years required to reach the Rs 1 crore goal reduces significantly if an investor increases the SIP even by 5% or 10% annually. Let’s have a look at how much time it will take to reach Rs 1 crore if you increase the SIP amount every year by 5% or 10%, assuming the Compounded Annual Growth Rate (CAGR) of your investment is 12%.

Increasing SIP by 5% annually

SIP strategy: Way to get your first Rs 1 crore fast from Systematic Investment Plan (5)

Rs 10,000 SIP: It would take 20 years 1 month to reach Rs 1 crore with Rs 10,000 monthly SIP in a mutual fund scheme. Increasing the SIP amount by 5% annually would let you reach Rs 1 crore 17 years 10 months at 12% interest.

Rs 20,000 SIP: It would take 15 years to reach Rs 1 crore with Rs 20,000 monthly SIP in a mutual fund scheme. Increasing the SIP amount by 5% annually would let you reach Rs 1 crore 13 years 5 months at 12% interest.

Rs 25,000 SIP: It would take 13 years 5 months to reach Rs 1 crore with Rs 25,000 monthly SIP in a mutual fund scheme. Increasing the SIP amount by 5% annually would let you reach Rs 1 crore in 12 years 1 month at 12% interest.

Rs 30,000 SIP: It would take 12 years 4 months to reach Rs 1 crore with Rs 30,000 monthly SIP in a mutual fund scheme. Increasing the SIP amount by 5% annually would let you reach Rs 1 crore in 11 years at 12% interest.

Increasing SIP by 10% annually

SIP strategy: Way to get your first Rs 1 crore fast from Systematic Investment Plan (6)

Rs 10,000 SIP: It would take 20 years 1 month to reach Rs 1 crore with Rs 10,000 monthly SIP in a mutual fund scheme. Increasing the SIP amount by 10% annually would let you reach Rs 1 crore 15 years 10 months at 12% interest.

Rs 20,000 SIP: It would take 15 years to reach Rs 1 crore with Rs 20,000 monthly SIP in a mutual fund scheme. Increasing the SIP amount by 10% annually would let you reach Rs 1 crore 12 years at 12% interest.

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(Disclaimer: The above content is for information purposes only. Mutual Funds are subject to market risks. There is no assurance or guarantee of returns from investing in any fund. Please consult your financial advisor before investing)

I'm a seasoned financial expert with a wealth of knowledge in personal finance, mutual funds, and investment strategies. My expertise is backed by a deep understanding of the intricacies of financial markets, investment vehicles, and wealth-building techniques. I have closely followed the trends and analyses provided by reputable sources in the financial industry, staying up-to-date with the latest developments.

Now, let's delve into the concepts presented in the article about the Systematic Investment Plan (SIP) strategy for reaching a Rs 1 crore goal through mutual fund investments. The article outlines two primary approaches: increasing the SIP amount and waiting for a dramatic increase in the rate of return.

Systematic Investment Plan (SIP):
- A SIP involves investing a fixed amount regularly (monthly or quarterly) in a mutual fund. This disciplined approach aims to harness the power of compounding over time.
Power of Compounding:
- The article emphasizes the power of compounding, suggesting that after reaching the initial Rs 1 crore corpus, wealth multiplication accelerates significantly.
Incremental SIP Increase:
- The article suggests that increasing the SIP amount annually by 5% or 10% can have a substantial impact on reaching the Rs 1 crore goal faster.
Compounded Annual Growth Rate (CAGR):
- The CAGR represents the geometric progression ratio that provides a constant rate of return over a specific period. In this context, the assumed CAGR is 12%.
Calculation Methodology:
- The article employs a calculation methodology, as evidenced by the data presented for different SIP amounts and their respective durations to reach the Rs 1 crore milestone.
SIP Amount and Duration Analysis:
- The article provides a detailed analysis of the time it takes to reach Rs 1 crore for different SIP amounts, considering annual increases of 5% and 10%.
Risk Disclaimer:
- The article includes a disclaimer emphasizing that mutual funds are subject to market risks, and there is no assurance or guarantee of returns. It advises consulting a financial advisor before investing.
Examples:
- The article includes specific examples, such as the time required to reach Rs 1 crore for different SIP amounts, ranging from Rs 10,000 to Rs 1 lakh, with incremental annual increases.

In summary, the article provides a comprehensive guide on utilizing SIP as a strategy to achieve a Rs 1 crore goal in mutual fund investments. It combines practical advice, mathematical calculations, and risk awareness to guide investors in making informed decisions.