How Much Should You Invest in Mutual Funds to Get ₹1 Crore?

Updated on: Jan 11th, 2022 - 12:24:18 PM

4 min read

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Individuals invest in mutual funds with the intention of enjoying high returns in the form of dividends and capital gains over time. We have covered the following in this article:

Mutual funds are one of the best options for long-term financial planning. The investors are not needed to have a lump sum in their hand to make their investments a profitable one. One can invest small amounts periodically in mutual funds via systematic investment plans (SIPs). This is why one should invest in mutual funds as it makes investments a lot easier.

Understand the Power of SIPs

A systematic investment plan (SIP) is a method of investing in mutual funds. As per this, investors can invest a small amount on a periodic basis. The frequency of investment can be weekly, monthly, quarterly, or semi-annually, as per the comfort of the investors. Also, investors can invest any amount that they feel like through SIP. However, an investor cannot invest an amount lesser than the minimum investible amount of the fund.

Therefore, investing in mutual funds via the SIP route is an excellent investment option. Also, what makes SIPs powerful is the fact that they help to mitigate market volatility. When the markets are down, by continuing the SIP, you get the benefit of buying more fund units at a lower price. When the markets are up, you buy fewer units. Hence, by investing in mutual funds via SIP, you get the rupee cost averaging.

Amassing Rs 1 crore in Different Time Horizons

After knowing the power of SIP, it is only wise to invest in mutual funds through SIP rather than a one-time lump sum. As SIPs allow you the flexibility to invest a small amount on a regular basis, it is on you to decide the amount of investment and horizon of investment.

The following are a few examples of reaching Rs 1 crore by investing a certain amount on a monthly basis:

i) Investing Rs 45,000 a month in an equity-oriented fund offering returns at the rate of 15% a year for a period of nine years will turn your investment’s worth to a whopping Rs 1.02 crore. In this, you invest only Rs 48.6 lakh while your returns would be a massive Rs 53.4 lakh.
ii) Investing Rs 30,000 a month in an equity-oriented fund which provides returns of 15% a year for a period of 11 years will pump your investment’s worth to touch Rs 1.01 crore. In this case, you would have invested only Rs 39.6 lakh while you would have earned Rs 61.34 lakh. However, given the rising expenses, setting aside a sum as high as Rs 30,000 a month would be a herculean task for most individuals.

Easiest Way of Accumulating Rs 1 crore With Mutual Funds

The easiest way of amassing Rs 1 crore with mutual funds is following the 15*15*15 rule. It says that if one invests Rs 15,000 a month for a period of 15 years in a fund, which offers returns at the rate of 15%, then they would accumulate Rs 1 crore. As per this, you would invest only Rs 27 lakh while you earn Rs 74.53 lakh. Setting aside Rs 15,000 a month is relatively easier and a timeframe of 15 years is a reasonable one.

Therefore following the rule of 15*15*15 is the easiest way of accumulating Rs 1 crore. Becoming a crorepati is not that difficult a task. It is relatively easier if you pick the right investment options and stay invested over the long term. Also, financial discipline plays a major factor in accumulating a sum of Rs 1 crore by investing regularly.

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