How to build a ₹5 Crore corpus in Mutual Funds explained by ETMONEY

Accumulating an impressive amount within a certain time frame is indeed a task but is highly achievable if certain steps are followed.

Is reaching a target of ₹5 Crore by investing in Mutual Funds possible?

The secret to building wealth requires a great deal of consistent efforts in saving at regular intervals which help in your investments to grow over a period. However, when we speak about accumulating a considerable amount of ₹5 Crore, it seems like an almost impossible task for someone who is a salaried employee. Nevertheless, if one starts investing early and remains consistent in his savings, they can achieve that target which almost looks unachievable. One of the best ways to reach for your goals is to set aside a portion of your savings at periodic intervals by investing in Systematic Investment Plan (SIP) of Mutual Funds which can help you grow your investments up to the targeted amount of ₹5 crores after a stipulated amount of time.

How much and for how long would you need to invest in SIPs to reach a target of ₹5 Crore?

Accumulating a ₹5 Crore corpus through SIP investment is possible provided you keep investing consistently over a period of time. SIPs are the best option for those who don’t have a lumpsum amount to invest and they can increase the monthly SIP amounts according to their income increase using step-up method while allocating SIPs. An annual step-up of 5% in equity mutual fund can allow you to achieve the goal of ₹5 Crore in 25 years even if you start with relatively small monthly investments.

According to the step-up SIP calculator, you can start with a monthly SIP of ₹19,500 with 5% annual increment to the monthly SIP for a period of 25 years and assuming 12% return to generate ₹5.01 Crore. This means that you are topping up your monthly SIP by 5% every year, for example, Rs 19,500 per month in 2022, Rs 20,475 in 2023, Rs 21,500 and so forth.

The best way to build your wealth consistently

Experts strongly believe that Systematic Investing Plans (SIPs) of mutual funds are one of the best alternatives to build a large corpus for especially the salaried employees who are not well-equipped to invest huge amounts at one go, to consistently grow your money over a period of time. Long term investors can expect comparatively higher returns by consistently investing through SIPs in equity funds. There are many Mutual Fund Investment Plans available in the market which can yield the desired results. ETMONEY has a seamless platform which can provide appropriate guidance on how to invest in the SIPs of best Mutual Funds available in India. There are a lot of options available which include many high returns Mutual Funds can help you build a huge corpus for your dreams.

Disclaimer: No Deccan Chronicle journalist was involved in creating this content. The group also takes no responsibility for this content.