How many SIPs are required to create a corpus of ₹5 crore in 20 years?

Gautam Kalia, SVP and Principal Super Investor at Sharekhan by BNP Paribas

It is always good to do investment planning at the early stage of life as it helps in building a good corpus with less amount of investment. To create a corpus of Rs 5 crore in 20 years, investors should start an SIP of Rs 50,500 assuming a return of 12% per annum. If the investor is ready to increase the SIP amount every year, he can create this corpus by starting the SIP amount from Rs 27,000 per year and increasing this SIP amount by 10% every year.

Rajesh Saitya, Co-Founder & COO, GT Force

if your goal 5 Crore in 20 Years, Investing in Mutual Funds through a Systematic Investment Plan (SIP) can be a smart and effective way to achieve your financial goals. to receive funds of 5 crores in 20 years, you would need to invest approx. 1,50,000 per month through a SIP. However, this can be achieved with careful planning and investing in the right mutual funds.

We recommend looking for mutual funds that have a strong track record of delivering consistent returns over the long term, while also being well diversified and having low costs. Some of the mutual funds we recommend for long term investors include:

, HDFC Top 100 Fund – This large-cap fund has a strong track record of delivering consistent returns over the long term.

, ICICI Prudential Equity & Debt Fund The fund has a diversified portfolio of equity and debt securities, which makes it a good option for long term investors.

, Mirae Asset Large Cap Fund The fund has consistently outperformed its benchmark index and has a well diversified portfolio.

Investing in mutual funds through SIP can help you achieve your financial goals, while also promoting responsible and sustainable investment practices. At our company, we are committed to helping people achieve their financial goals through smart and ethical investment strategies.

Abhinav Angirish, Founder, Investonline.in

The most popular long term investment vehicle is mutual funds as they not only provide liquidity but also dividends, diversification, experienced management, flexibility to invest in small amounts, affordable cost, low tax on gains, tax benefits and much more. Systematic Investment Plan (SIP) is the most popular way to invest in Mutual Funds as it enables investors to maximize their returns through the power of compounding, rupee cost averaging, convenient investment mode, adjustable tenure and other factors.

A huge corpus target usually has a long process. The hardest part of building such a large corpus is coping with what life throws at us. You have a good chance of success if we can maintain the discipline to invest repeatedly and stick with it over the years. You will need a SIP of Rs. 51,000 per month in equity mutual funds (assuming 12% per annum returns) to accumulate a corpus of Rs 5 crore over 20 years.

Accumulating Rs 5 crore in 20 years is not easy, but it is still possible if you make smart financial decisions. Also, investing wisely does not require that you park your funds in the riskiest MF schemes. The first step for investors is to assess their risk tolerance and comfort level with market volatility. For example, an SIP in equity mutual funds typically gives around 12% returns, but there have been years when money in the portfolio has sunk. Instead, you can get 10% returns from a diversified portfolio of asset classes which is more stable and reliable.

The investor can decide the appropriate amount of SIP to invest in equity or a diversified portfolio based on his comfort level with risk. To deposit Rs. 5 crores in twenty years, you would need a systematic investment plan (SIP) of Rs. 51,000 every month. On the other hand, a SIP of 65k in various asset classes grows by around 10% to 5 cr over time. By adopting a systematic and consistent strategy of investing in reputed Mutual Fund schemes, investors can walk on the path to long-term financial success.

Apart from SIPs, investors should keep money aside in a separate emergency fund so that they can access the cash in times of crisis without dipping into their SIP corpus.

Lastly, if possible seek the help of a trusted advisor. Keep in mind that investing is simple, wealth creation is not! The goal is to accumulate a substantial chunk of money, and we are talking about Rs. 50 million. A competent advisor can help you invest in the best funds for your purpose, as well as help you control your greed and fear and avoid falling prey to pass-by gimmicks or marketing gimmicks.

To achieve the target amount of Rs. 5 crores in 20 years, assuming a rate of return of 12%, you need to invest Rs. 50,043 as the monthly SIP amount. To achieve the goal, your lumpsum investment should be Rs. 51,83,338.

To achieve your goal, you can invest in diversified equity funds such as:

Mirae Asset Large Cap Fund This scheme belongs to the Large Cap Equity Fund category. The scheme needs to keep a minimum of 80% of the total assets in shares of large cap companies. This scheme was launched in April-2008. The scheme has generated a CAGR of 14.48% since inception.

Canara Robeco Flexi Cap Fund The scheme belongs to Flexi Cap Equity Fund category. The scheme needs to hold a minimum of 65% of its total assets in equity shares of companies across any market cap – large cap, mid cap, small cap stocks. This scheme was launched in September-2003. The scheme has generated a CAGR of 17.00% since inception.

Nippon India Small Cap Fund The scheme belongs to the Small Cap Equity Fund category. The scheme needs to keep a minimum of 65% of its total assets in shares of small cap companies. This scheme was launched in September-2010. The scheme has generated a CAGR of 19.26% since its inception.

Mayank Bhatnagar, Chief Operating Officer, Finage

To deposit Rs. 5 crore in 20 years, you would need to invest somewhere between Rs. 38,000 and Rs. 45,000 per month systematically in mutual funds (assuming a CAGR of 13%-14% per month depending on the risk/reward of the fund chosen). Bear in mind that returns from equity mutual funds are non-linear, and fluctuations are to be expected!

Investing with clear goals in mind rather than in an ad-hoc manner can help you avoid behavioral biases like greed and fear that can derail your journey. Ultimately, the difference between achieving your 5-crore target and falling short will depend on your ability to stay disciplined throughout the long journey and not let your emotions get the better of you.

Since 20 years is a long time frame, you can and should take a measured risk by investing in small and mid-cap oriented funds that offer the best opportunity for wealth creation through compounding and rupee cost averaging. In this case, investing based purely on your risk appetite would be a mistake as you would be missing out on the opportunity to take advantage of such a long time frame. If the volatility of small and mid-caps seems daunting, you can also opt for flexi cap funds; But risking less than that would mean you’re not doing justice to the 20-year time frame.

If a SIP of Rs. 38,000 seems too high, you can alternatively opt for a disciplined step-up strategy. By starting with an SIP of Rs. 12,000 and got it for only Rs. 5,000 per year, you can deposit Rs. 5 Crore assuming 14% CAGR from high risk funds. This is how the magic of disciplined, automatic step ups works! Ultimately, it is important to understand the risk/reward and tailor your investment strategy to something you feel comfortable maintaining for the long term.

Lalit Tripathi, Chairman and Managing Director of Vedanta Asset

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to create a fund of An investment of Rs 5 crore is required in the next 20 years. 50,000 per month with an annualized return of 12%. Thus, the total investment of Rs. 1,20,00,000 will finally give you a corpus of Rs. 5 crores after 20 years. Money multiplication is a catchy term but its real meaning lies in the understanding of how SIP works. Investing in Mutual Funds is all about patience, perseverance and persistence.

Based on the potential of the Indian economy and markets, we believe that investors should look at funds that have been consistent in performance despite market volatility. Based on the past performance of the funds, investors can rely on a few funds that have performed well over the years. It is to be noted that these funds have been recommended on the basis of their past performance and future growth potentials. But there may be unforeseen circumstances due to which we may need to switch the investment to some other reliable funds at that point of time. Mutual funds are subject to market risks. But those who stay for a long time, they have a big advantage.

These funds are –

• HDFC Top 100 Fund – Reg (G)

• ICICI Pru Large & Mid Cap Fund – Reg (G)

• HDFC Large & Mid Cap Fund – Reg (G)

• Canara Robeco Emerging Equities – Reg (G)

• HDFC Multicap Fund – Reg(G)

• Nippon India Multicap Fund – Reg (G)

• HDFC Midcap Opportunities Fund – Reg (G)

• ICICI Pru Midcap Fund – Reg(G)

• HDFC Small Cap Fund – Reg (G)

• Canara Robeco Small Cap Fund – Reg (G)

Nirav Karkera, Head of Research, Fisdom

A portfolio built with a time horizon of up to 20 years is quite likely to be an equity oriented portfolio. In such a case, if we consider the expected performance of broad equities in the medium term, it can be pegged in the ballpark of 12% CAGR. Keeping in view the possibility of improved performance due to intermittent improvement in performance and active selection, the limit may be increased to 10% CAGR and 14% CAGR.

Mathematically, considering a target portfolio of INR 5 Crore over 20 years, this would give a monthly SIP contribution of anywhere in the range of INR 45,000 to INR 75,000. Regardless of beliefs regarding one’s investment decisions, it would be wise for the investor to attempt to invest an amount closer to the upper limit. A higher-than-calculated investment proposition capitalizing on a rough performance patch while enhancing the corpus value in a favorable environment.