REACHING RS 1 CRORE TAKES 6 YEARS BUT IT EARNS RS 4 CRORE MORE IN JUST NEXT 10 YEARS

A lot of investors consider achieving a Rs 1 crore corpus through a systematic investment plan (SIP) a big deal and want to do it quickly. What they often overlook is that the hardest part is earning that first Rs 1 crore; after that, accumulating the next crore gets easier over time if they keep investing without any interruption. Once they hit that Rs 1 crore milestone, reaching each subsequent Rs 1 crore mark takes less and less time. In a long-term SIP investment, like over 10-20 years, it is very likely that the growth in the second half will be significantly greater than in the first half.

From Rs 1 lakh SIP to Rs 5 cr: Patience or high returns?

SIP investment in a mutual fund is more about being patient than seeing returns in the initial years. It might take a while before it outpaces the amount you have invested.

"When you invest a fixed amount every month through SIP, the returns earned on each investment are reinvested along with your regular SIP. Over time, those returns themselves start earning additional returns, creating a snowball effect. For example, investing Rs 10,000 per month at a 12% annual return grows to Rs 8 lakh in 5 years, Rs 23 lakh in 10 years, and nearly Rs 92 lakh in 20 years. This shows how returns snowball over time," explains Chartered Accountant Foram Naik Sheth, KMP, Wealth Management Solutions, NPV Associates LLP.

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Even if you start with Rs 1 lakh monthly SIP in a mutual fund that gives you 12% annualised return, it takes 6 years for you to reach a Rs 1.04 crore corpus.

But once you get there, hitting the next milestone becomes easier. If you continue this investment for 4 years more, that is 10 years overall, you could reach a Rs 2.24 crore corpus.

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Investing two years more will help you get a Rs 3.08 crore corpus. In 14 years, you can achieve a Rs 4.14 crore corpus and in 16 years, you will end up with a Rs 5.5 corpus.

From Rs 1 lakh/month SIP to Rs 5 crore corpus (at 12% return)

• Corpus in 6 years- Rs 1.04 crore
• Corpus in 10 years- Rs 2.24 crore
• Corpus in 12 years- Rs 3.08 crore
• Corpus in 14 years- Rs 4.14 crore
• Corpus in 16 years- Rs 5.46 cr

“Many investors quit their SIPs around year 7 or 8 because the growth looks slow. Most of your SIPʼs magic happens after year 10- when compounding accelerates and your earlier contributions start multiplying at scale,” says Nehal Mota, Co-founder & CEO, Finnovate.

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The Rs 5 crore journey is not only for those who can save Rs 1 lakh per month but also for those who can start with Rs 30,000 per month in SIP. However, they will have to have more patience and go a little longer for their investment to grow big.

Years to reach Rs 5 cr corpus from Rs 30,000/month SIP to Rs 5 crore corpus

Let’s say you can’t manage a Rs 1 lakh monthly SIP because your total monthly income is Rs 1 lakh. You can only invest up to 30% of your income in SIP, in this case Rs 30,000/month, but you still aim for a Rs 5 crore corpus. You can definitely do that but it will take 25 years with a 12% annual return. What’s interesting is that your first Rs 1 crore will be reached in 13 years, while the next Rs 4 crore will come in just 12 years.

“Imagine a snowball rolling down a hill. It starts small but gathers mass as it moves. That is exactly how SIPs work. Let’s say you invest Rs 25,000/month at 12% returns. After 10 years, your corpus stands near Rs 56 lakhs. After 20 years, it is Rs 2.29 crore and after 25 years, it will be Rs 4.25 crore. Those last 5 years gave you Rs 2 crore, almost 50% of your total wealth,” says Mota.

From Rs 30,000/month SIP to Rs 5 crore corpus (at 12% return)

• Corpus in 13 years- Rs 1.08 crore
• Corpus in 18 years- Rs 2.14 crore
• Corpus in 21 years- Rs 3.1 crore
• Corpus in 23 years- Rs 4 crore
• Corpus in 25 years- Rs 5.10 crore

Years to take for a Rs 5 cr corpus from Rs 30,000 step up SIP

Financial planners suggest that you should step up the amount you are investing as your income rises. A step-up SIP is made for that purpose and you can step up the amount every six months or year as your income rises. It will also help achieve a financial target quicker than a simple SIP. Assuming that you start a Rs 30,000 step up SIP where you increase your investment 7% annually, you can achieve a Rs 5 crore corpus target in 21 years compared to 25 years when you don’t step up your amount. While your first Rs 1 crore will come in 11 years, you can get the next Rs 4 crore in just 10 years.

From Rs 30,000/month step SIP to Rs 5 crore corpus (7% annual step up, 12% return)

• Corpus in 11 years- Rs 1.05 crore
• Corpus in 15 years- Rs 2.08 crore
• Corpus in 18 years- Rs 3.30 crore
• Corpus in 20 years- Rs 4.42 crore
• Corpus in 21 years- Rs 5.10 crore

What if your SIP investment grows at 14% instead of 12%?

When you invest for a long time, even a 2% extra return can really change the game, making it easier for you to hit your financial goal sooner. For instance, with a monthly SIP investment of Rs 30,000,, if the annual return jumps from 12% to 14% instead , you could hit that target of Rs 5 crore corpus in 23 years instead of 25.

"Even a small change in the rate of return can make a huge difference to the final corpus over a long period due to compounding. For example, if you invest Rs 10,000 per month for 25 years, your total investment will be Rs 30 lakh. At a 10% annual return, the corpus grows to about Rs 1.24 crore, whereas at a 12% return, it becomes Rs 1.70 crore. This means that a 2% higher return results in nearly Rs 46 lakh of additional wealth," says Foram Naik Sheth.

“Even a 2% difference in annual return can be game-changing. Over 25 years, at 10% returns, Rs 25,000/month grows to about Rs 3.1 crore. At 12%, it becomes nearly Rs 4.25 crore. That’s a Rs 1.15 crore gap from just 2% higher returns,” says Mota.

Years to reach Rs 5 cr if rate of return is 14%

• Corpus in 12 years- Rs 1 crore
• Corpus in 17 years- Rs 2.29 crore
• Corpus in 19 years- Rs 3.09 crore
• Corpus in 21 years- Rs 4.05 crore
• Corpus in 23 years- Rs 5.34 crore

Here also, you can see that in the first 12 years, the corpus generated was Rs 1 crore, but in the next 11 years, it reached Rs 5.34 crore.

What are the lessons from these calculations?

The first lesson is to avoid pulling out of the investment too soon. When you do the math, it’s clear that hitting the Rs 1 crore milestone can be quite tough. But if you achieve you get there, moving on to bigger goals becomes easier

“The Rs 1 crore journey teaches us one thing - don’t chase the market; stay invested. Because while others are busy predicting the best time to invest, a disciplined investor lets time do the heavy lifting. So the next time your SIP feels ‘too slow just remember - ‘the first crore takes time. The next ones, much less’,” says Mota.

"Trying to predict market highs and lows is extremely difficult and often results in irregular investing, panic decisions, and missed opportunities. Therefore, for SIP growth, it is best to focus on maximum time in the market rather than attempting to time it as patience and consistency are the real drivers of wealth creation," says Naik Sheth.

The second takeaway is that you should look for ways to get a good return on your investments since it can help you reach your goals faster. This can be done by diversifying your investment portfolio,which means putting your money into different, unrelated assets.

“Asset allocation, fund selection, and patience matter as much as the SIP itself,” says Nehal Mota.