Mutual Fund Calculator: Monthly SIP You Need To Accumulate ₹11 Crore By Age 50
Whether you want to retire early, start your own business, buy a beach house, or pursue a passion project, building a significant amount of wealth by your 50th birthday will help you make decisions without financial constraints. You may be in your 20s and that may seem early, but the time to start working towards that goal of wealth creation is now. You can accumulate as much as Rs. 11 crore in the next 25 years if you start an equity mutual fund investment through the Systematic Investment Plan (SIP) mode. Here’s how.
How to accumulate Rs. 11 crore by age 50?
To accumulate a corpus of Rs. 11 crore by age 50, you would have to begin by investing Rs. 12,000 every month now. Here is what you need to note:
- This is assuming that you are in your mid-20s right now and have at least 25 years to go before you reach 50. If you are older, then just add 25 years to your age. Basically, you need an investment horizon of 25 years to build this corpus.
- The estimated returns on the equity mutual fund are assumed to be 15%. In the long term, that is a period of more than 10 to 15 years, equity mutual funds are known to give returns as high as 15% if not more.
- You need to carefully choose an equity mutual fund whose objective is long-term wealth creation, has a low total expense ratio, and has an experienced fund manager with a good track record, among other things.
- To reach your goal of Rs. 11 crore in 25 years, you will have to opt for a step-up SIP. Let’s discuss this in detail.
What is a step-up SIP?
When you invest in mutual funds through an SIP, you get the option of choosing the step-up SIP feature. Here, your monthly SIP amount is increased by a specified amount or percentage at a predetermined schedule, such as annually. This helps in increasing your SIP contribution gradually as your income increases and allows you to meet your financial goals quicker.
For building a corpus of Rs. 11 crore in 25 years, while you can start with an SIP of Rs. 12,000, you will have to select a 15% step-up annually. So, in the second year, your SIP amount will be Rs. 13,800, in the third year it will be Rs. 15,870, and so on. If you do not opt for an annual SIP step-up, you will take over 32 years to reach this same amount. That’s an extra seven years.
The key to wealth creation is starting today. Time helps your money grow because of the power of compounding and investments such as equity mutual funds help you earn returns that are inflation-beating. You can make use of an online SIP calculator to figure out what amount of SIP works best for your financial goals and investment horizon.