How to Accumulate Rs 1 Crore in 10 Years With Rs 50,000 Salary? Which Mutual Fund SIP One Should Opt For?
how to accumulate rs 1 crore in 10 years with rs 50,000 salary? which mutual fund sip one should opt for?
The goal to achieve the target value of Rs 1 crore in 10 years is quite steep but achievable, using a strategic and systematic investment plan. This strategy requires you to increase your investment amount towards SIP on a yearly basis, mostly in line with the increase in your income. This incremental increase, known as a step-up SIP, can significantly boost your corpus.
Nehal Mota, Co-Founder & CEO, Finnovate explains how it's achievable. With a starting amount of Rs 25,500, and every increment of 10 per cent of the amount, you can accumulate 1 crore, if the underlying investments generate an annual return of 15 per cent, for next 10 years.
However, historically, the equity mutual funds have offered an average annual return of around 12 - 15 per cent. While the current returns look elevated at around 15 per cent (for multicap funds), 18 per cent (mid and small cap funds), the same can not be extrapolated over next 10 years.
Which Mutual Fund SIP One Should Opt For?
To achieve higher returns, you could opt for a mix of large-cap, mid-cap, and small-cap equity funds. Large-cap funds are relatively safer but offer moderate returns, while mid-cap and small-cap funds are riskier but can provide higher returns. Diversify your portfolio to balance risk and return.
Given your salary range of 50,000, the monthly SIP amount of Rs 25,500 may not be feasible. So are the two possible scenarios, with different starting SIP amount and step up percentage.
Step UP 10% Every Year
| Starting SIP Amount (Rs) | Expected Return at 12% (Rs) | Expected Return at 15% (Rs) |
| 15,000 | 50 Lakh | 59 Lakh |
| 20,000 | 67 Lakh | 79 Lakh |
Step UP 5% Every Year
| Starting SIP Amount (Rs) | Expected Return at 12% (Rs) | Expected Return at 15% (Rs) |
| 15,000 | 42 Lakh | 50 Lakh |
| 20,000 | 56 Lakh | 66 Lakh |
Along the way, keep an eye on market conditions and consult a financial advisor to make informed decisions. By consistently investing and periodically reviewing your strategy, reaching the Rs 1 crore goal in 10 years is achievable.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of TN Network.)