Unveiling the Power of Rs 10,000 Monthly SIP: How to accumulate Rs 1 crore with compounding (2024)

Power of Rs 10,000 Monthly SIP:When we are on the path to creating wealth, our aim is to build a huge corpus. But the biggest hurdle that we find on the way to creating wealth is that we think we can't achieve that goal as our monthly investment is small. We think, how much will I accumulate even if I invest Rs 10,000 a month? Such thoughts sometimes discourage you from saving and investing that money. But you may be completely wrong. Even if you invest Rs 10,000 a month in mutual funds through a systematic investment plan (SIP), there are chances that you may accumulate a significant corpus of Rs 1 crore. Even though your investment in that period may be much less than the total gains that you get at the end of it, compounding your mutual fund investment helps your money grow faster. Here are expert calculations that shed light on the strategic approach needed to achieve your Rs 1 crore goal through SIPs-

Which investment strategy will help build Rs 1 crore corpus?

The 8-4-3 rule of compounding can be your way to achieve the Rs 1 crore corpus goal. Jiral Mehta, Senior Research Analyst, FundsIndia said that in this strategy, if you invest Rs 10,000 every month, assuming annual returns of 12 per cent, it takes 8 years to reach the Rs 16 lakh maturity amount. While you get your next Rs 16 lakh return in just four years (total 12 years), and similarly, the next Rs 16 lakh return in just three years.

At the end of the 20th year of your investment, your corpus will reach around Rs 1 crore. If you continue this investment for another 10 years, or a total of 30 years, your wealth will grow much faster.

Here's the full calculation:

Rs 10,000 SIP/month
Time-periodTotal investmentReturns (12%)Accumulation
8-years9,60,0006,55,26616,15,266
12-years14,40,00017,82,52232,22,522
15-years18,00,00032,45,76050,45,760
20-years24,00,00075,91,47999,91,479
25-years30,00,0001,59,76,3511,89,76,351
30-years36,00,0003,16,99,1383,52,99,138

What is the 8-4-3 rule?

The 8-4-3 rule is a concept used to illustrate the power of compound interest. It suggests that, with consistent investment and a high rate of return, your money can grow exponentially over time. Here's a breakdown of the 8-4-3 rule:

  • 8-years: It represents the initial period where you steadily invest and accumulate a certain amount.
  • 4-years: Due to compounding, your money grows at a faster pace in the following years. It takes only 4 years to accumulate the amount, which means half the time it took for the first.
  • 3-years: The growth accelerates even further. In the next three years, you will accumulate the same amount as you did in the previous four years.
Unveiling the Power of Rs 10,000 Monthly SIP: How to accumulate Rs 1 crore with compounding (2024)

FAQs

How can I get 1 crore through SIP? ›

The famous 15*15*15 Rule states that an investor trying to accumulate Rs 1 crore should consider an SIP of Rs 15,000 per month at 15% for 15 years to get to Rs 1crore. While this approach holds mathematical validity, it may not be suitable for all investors and market conditions.

Which SIP is best for 10000 per month? ›

Top 10 SIP plans for 10,000 rupees per month in 2024
Mutual FundRisk InvolvedReturns (%)
Canara Robeco Emerging Equities FundVery High20.84
Motilal Oswal Focused FundVery High15.37
PGIM India Flexi Cap FundVery High21.34
Mirae Asset Large & Midcap FundVery High23.09
6 more rows
Feb 16, 2024

What if I invest $10,000 in SIP for 20 years? ›

At the end of the 20th year of your investment, your corpus will reach around Rs 1 crore. If you continue this investment for another 10 years, or a total of 30 years, your wealth will grow much faster.

What is the 8 4 3 rule of compounding? ›

What is the 8-4-3 rule of compounding? In the 8-4-3 strategy, the average return of a particular investment amount for 8 years is 12 per cent/annum, while after that time period, it will take only half of that horizon, i.e., 4 years (total 12 years), to get a return of 12 per cent.

What if I invest $10,000 a month in SIP? ›

An investment of Rs 10,000 per month via systematic investment plan (SIP) route over a period of five years in Quant Small Cap Fund's growth is worth nearly Rs 19 lakh today.

How much should I invest in SIP monthly to get 1 crore? ›

Investing a monthly SIP investment of Rs 63,000 for the next 8 years could potentially build a corpus of around Rs 1 crore, assuming an average annual return of 12%.

What happens if I invest 10000 a month in SIP for 30 years? ›

According to tax and investment experts, if an investor invests ₹10,000 per month in mutual fund SIP for 30 years, he or she can accumulate around ₹12.7 crore at the time of maturity provided it has used 10 per cent annual step-up.

Which SIP is best for 5 years in India? ›

Listed below are some of the best equity funds for which you can start a SIP.
  • Quant Small Cap Fund Direct Plan-Growth. ...
  • Tata Digital India Fund Direct-Growth. ...
  • ICICI Prudential Technology Direct Plan-Growth. ...
  • SBI Technology Opportunities Fund Direct-Growth. ...
  • Aditya Birla Sun Life Digital India Fund Direct-Growth.

Which type of SIP gives highest return? ›

List of Best SIP Funds in India Ranked by Last 5 Year Returns
  • Parag Parikh Flexi Cap Fund. EQUITY Flexi Cap. ...
  • Canara Robeco Bluechip Equity Fund. EQUITY Large Cap. ...
  • Quant Active Fund. EQUITY Multi Cap. ...
  • Quant Large and Mid Cap Fund. ...
  • Kotak Bluechip Fund. ...
  • SBI Focused Equity Fund. ...
  • Quant Focused Fund. ...
  • Kotak Equity Opportunities Fund.

Is SIP tax free? ›

Is SIP tax-free? SIPs themselves are not tax-free, but they can be a powerful tax-saving tool. Here is why: SIPs are a way to invest in certain mutual funds, like Equity Linked Saving Schemes (ELSS).

What is the formula for compounding SIP? ›

You can understand the workings of a SIP calculator with this formula. FV = P [ (1+i)^n-1 ] * (1+i)/iFV = Future value or the amount you get at maturity. Take an example where you invest Rs 2,000 per month for a tenure of 24 months. You expect a 12% annual rate of return (r).

Which banks SIP is best? ›

Best SIP Plans in India in 2024
Returns
Fund Name3 Years10 Years
Multi Cap Growth Fund ICICI Prudential17.16%13.72% View Plan
Equity Fund SBI16.39%13.61% View Plan
Equity II Fund Canara HSBC Oriental Bank15.5%11.85% View Plan
7 more rows

How long will it take for $10000 to double at 8 compound interest? ›

For example, if an investment scheme promises an 8% annual compounded rate of return, it will take approximately nine years (72 / 8 = 9) to double the invested money. Note that a compound annual return of 8% is plugged into this equation as 8, and not 0.08, giving a result of nine years (and not 900).

What is the 69 rule in compound interest? ›

The Rule of 69 is a simple calculation to estimate the time needed for an investment to double if you know the interest rate and if the interest is compound. For example, if a real estate investor can earn twenty percent on an investment, they divide 69 by the 20 percent return and add 0.35 to the result.

What is the 8 4 3 rule for SIP investment? ›

- You can follow this rule to systematically grow your money: - 8% of Your Income: Allocate 8% of your income towards investments. - 4% Return: Aim for an annual return of 4% on your investments. - Reinvest for 3 Decades: Continue reinvesting your returns for a period of 30 years.

Which mutual fund is best for 1 crore? ›

You can evaluate these four funds: UTI Nifty Index Fund, Nippon India Large Cap Fund; Parag Parikh Flexi Cap Fund, and HDFC Flexicap Fund and SBI Large & Mid Cap Fund. Unlock a world of Benefits!

How to make 1 crore by investing 5000 per month? ›

So, in the first year you start SIP of 5000 per month, and increase it to SIP of 5500 per month in the second year i.e. (Rs. 5,000+10% of 5,000), in the third year it will be Rs. 6,050 i.e. Rs 5,500 + 10% of 5,500 and so on. And assuming an annualized rate of return of 12% you can meet your target corpus of Rs.

What happens if I invest 20000 a month in SIP for 10 years? ›

Given that performance, if one would started investing Rs 20,000 monthly through SIP in this fund 10 years ago, they would have got Rs 1.01 crore with capital gains of Rs 77.18 lakh. The expense ratio of the scheme is 0.77 per cent against the category average of 0.62 per cent.

How much to invest in mutual funds to make 1 crore? ›

In this article, we will look at how to build a Rs 1 crore corpus throughout various time periods. To make a corpus of Rs 1 crore in 10 years, one must invest Rs 44,000 monthly. With an estimated yearly return of 12 per cent, investing Rs 44,000 per month means Rs 5,28,000 a year, and Rs 52.28 lakh in 10 years.

Top Articles
Latest Posts
Article information

Author: Nathanial Hackett

Last Updated:

Views: 5329

Rating: 4.1 / 5 (52 voted)

Reviews: 83% of readers found this page helpful

Author information

Name: Nathanial Hackett

Birthday: 1997-10-09

Address: Apt. 935 264 Abshire Canyon, South Nerissachester, NM 01800

Phone: +9752624861224

Job: Forward Technology Assistant

Hobby: Listening to music, Shopping, Vacation, Baton twirling, Flower arranging, Blacksmithing, Do it yourself

Introduction: My name is Nathanial Hackett, I am a lovely, curious, smiling, lively, thoughtful, courageous, lively person who loves writing and wants to share my knowledge and understanding with you.