Saving a crore rupees with an investment of just Rs 5000 might seem impossible at first, but with proper financial planning and utilizing the power of compounding, it is entirely possible for both residents and Non-Resident Indians(NRI) and Overseas Citizens of India(OCIs). Here’s a guide on how you can generate returns or save 1 crore on a monthly investment of Rs 5000.
Understand the Power of Compounding
The key to accumulating a large sum with a relatively small monthly investment lies in compounding. Compounding is the process where the returns on your investment start generating their own returns. Over time, this leads to exponential growth of your money.
For instance, investing Rs 5000 monthly in an instrument that offers a 12%-15% annual return can grow substantially due to compounding.
Also read: How to Make 1 Crore in 10 Years by SIP?
Choose the Right Investment Vehicle
To achieve an average return of around 12%-15%, you need to choose investment options that offer higher returns compared to traditional savings accounts or fixed deposits. Here are a few options:
- Mutual Funds: Equity mutual funds, particularly diversified and index funds, have historically provided returns in the range of 10-15% over the long term.
- Stocks: Direct investment in stocks can offer high returns but requires substantial knowledge and risk tolerance.
- Public Provident Fund (PPF): While safer, PPF offers lower returns (~7-8%), making it less effective for this goal.
- SIP in Mutual Funds: Systematic Investment Plans (SIPs) in mutual funds allow you to invest a fixed amount regularly, providing the benefits of rupee cost averaging and the potential for compounding.
For the purpose of this guide, let’s assume you choose a SIP in an equity mutual fund that offers a 12%-15% annual return.
Also read: Best SIP to Invest in 2024 – Top 10 SIP Mutual Fund Plans for NRIs/OCIs
How much to invest to save 1 crore?
Let’s see how much return can you expect by investing in equity mutual fund scheme that offers an annual result of 15%.
- If you invest Rs 4000 per month, it will take 23 years and 3 months to save Rs 1 crore.
- If you invest Rs 5000 per month, You can make 1 crore in 21 years 9 months.
- If you invest Rs 7500 per month, You can make 1 crore in 19 years and 2 months.
- If you invest Rs 10000 per month, You can make 1 crore in 17 years and 5 months
Also read: What is the 15x15x15 Rule In Mutual Funds for NRIs?
How can you do a Step-up SIP and save 1 Cr Rupees?
One of the best ways to achieve your financial goal early is to increase your monthly SIP installment yearly as your salary grows. Considering that as you grow and gain experience your salary grows every year, to accelerate your wealth creation goal you can increase your monthly investment. This is also called step-up SIP. This has various benefits:
- Helps you adjust or bear the effects of inflation on your savings.
- Helps you maintain the pace of your savings.
- Helps your increased salary money invest at a better place.
To understand how step-up SIP works let’s take an example that your initial year investment was Rs 5000. After a year, you increase it by 5%. That means now your investment will become 5500 for this year. This way you can increase your SIP investment by tiny portions to achieve your 1 crore dream.
Use this table to see how you can save up Rs 1 crore
| SIP amount every month | Annual increase (%) | Number of months it will take to save Rs 1 crore |
| Rs 4000 | No Increase | 23 Years 3 Months |
| Rs 4000 | 5% | 21 Years 4 Months |
| Rs 4000 | 10% | 19 Years 4 Months |
| Rs 5000 | No Increase | 21 Years 9 Months |
| Rs 5000 | 5% | 20 Years |
| Rs 5000 | 10% | 18 Years 2 Months |
| Rs 7500 | No Increase | 19 Years 2 Months |
| Rs 7500 | 5% | 17 Years 6 Months |
| Rs 7500 | 10% | 16 Years |
| Rs 10,000 | No Increase | 17 Years 5 Months |
| Rs 10,000 | 5% | 16 Years 8 Months |
| Rs 10,000 | 10% | 14 Years 6 Months |
Wrapping Up
To achieve your financial goal you need to invest regularly. It is only possible with the right strategy and financial planning. By investing in equity mutual funds through SIPs, you can consider a step-up SIP plan and you can maximize your returns over time. Equities offer higher returns even though it has little risks, making them a good long-term investment. Regularly increasing your investment amount as your income grows helps you stay on track with your financial goals. With consistency and good financial planning, you can achieve your Rs 1 crore saving dream or any financial target.
Invest in NRI Mutual Funds with SBNRI
NRIs can now download the SBNRI App and choose to invest in different NRI mutual fund schemes in India with ease. You can also get detailed mutual fund advice from experts at SBNRI. Also, visit our blog and YouTube channel for more details.
SBNRI is an authorized Mutual Fund Distributor platform & registered with the Association of Mutual Funds in India (AMFI). ARN No. 246671. NRIs willing to invest in mutual funds in India can download the SBNRI App to choose from 2,000+ mutual fund schemes or can connect with the SBNRI wealth team to better understand Mutual Fund investments.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions. SBNRI does not intend to predict future returns, please read all related documents before investing.
FAQs
What if I invest 5000 Rs per month?
If you invest Rs 5000 per month, You can make 1 crore in 21 years 9 months at 15% interest rate.
Is SIP better than FD?
SIP is better than FD depending totally on your investment goals, horizon and risk tolerance. SIPs provide higher potential returns with more risk, while FDs provide stable, but usually lower, returns.
Is SIP risk-free?
No, SIP is not completely risk-free as it depends on market conditions and fluctuations.
What is a Systematic Investment Plan or SIP?
SIP is a mutual fund that allows you to invest a fixed amount of money at regular intervals. You can invest weekly, monthly, and quarterly.
Why is SIP a good investment?
SIP is highly flexible and convenient to use as they are automated once you set the amount and the date for your monthly debit.
What is the best date to invest in SIP?
The best date to invest in SIP (Systematic Investment Plan) depends on the following factors:
- When Funds are available in the investor’s account.
- The disposable income left.
- Number of SIPs you have invested in.
How to make Rs 1 crore wealth from mutual funds in 10 years?
You can invest in a monthly SIP of Rs 43,100 for 10 years at an expected return of 12% to generate Rs 1 crore corpus at the end of 10 years. Based on the historical performance as aforementioned, the NIFTY 100 Index has provided 12.3% average annual return for the past 15 years.
How to make Rs 1 crore wealth from mutual funds in 15 years?
You can use the rule of 15x15x15 to make a wealth of Rs 1 crore from mutual funds in 15 years. With this rule of 15x15x15, you can invest Rs 15,000 a month for 15 years at an expected return of 15% and can generate Rs 1 crore (Rs 1.01 crore approx.) after 15 years.
Can I earn Rs 1 crore from mutual funds in 10 years?
Yes, you can earn Rs 1 crore from mutual funds in 10 years by investing in SIP on a monthly basis and become a crorepati from mutual funds.
Can NRIs become crorepati from mutual funds in 10 years?
Yes, NRIs can invest in various mutual fund schemes in India. If an NRI invests in a monthly SIP of Rs 43,100 over 10 years at an expected return of 12%, they will have a corpus of Rs 1 crore at the end of 10 years. Based on the historical performance as aforementioned, the NIFTY 100 Index has provided 12.3% average annual return for the past 15 years.
Can NRIs become crorepati from mutual funds in 15 years?
Yes, NRIs can become crorepati from mutual funds in 15 years by following the rule of 15x15x15 and investing Rs 15000 a month in SIP for 15 years with an expected rate of return of 15%, then they will become crorepati after 15 years with a wealth corpus of Rs 1 crore.
Can NRI invest in mutual funds in India?
Yes. NRI can invest in mutual funds in India using their NRE/NRO bank account once they complete their Mutual Fund KYC.
How can NRI buy mutual funds in India?
NRI investors can purchase or sell mutual funds in India once they complete their Mutual Fund KYC and have an operating NRO/NRE Bank account.
