How much should you invest every month to build one crore rupees?

No matter how many years a person works, retirement eventually brings an end to regular employment income. Without adequate financial planning, managing expenses after retirement can become difficult. Building a retirement corpus during one’s working years can help provide greater financial security in the later years.

Simply setting aside money in a bank account may not be enough to build a substantial corpus over the long term. Regular investing, combined with a suitable investment strategy and a sufficiently long investment horizon, can help investors work towards their financial goals.

A Systematic Investment Plan (SIP) allows investors to invest a fixed amount in a mutual fund scheme at regular intervals, such as monthly. The eventual value of the investment depends on the amount invested, the investment period and the returns generated by the underlying investment.

For illustration, if an annual return of 12 per cent is assumed, different monthly SIP amounts and investment periods could potentially result in a corpus of around ₹1 crore or more.

₹5,000 monthly SIP

A monthly SIP of ₹5,000 maintained for 27 years would involve a total investment of ₹16.20 lakh. Assuming a 12 per cent annualised return, the investment could grow to approximately ₹1.21 crore.

₹10,000 monthly SIP

Investing ₹10,000 every month for 21 years would involve a total investment of ₹25.20 lakh. At an assumed annualised return of 12 per cent, the corpus could grow to approximately ₹1.13 crore.

₹15,000 monthly SIP

A monthly SIP of ₹15,000 continued for 18 years would result in a total investment of ₹32.40 lakh. Assuming a 12 per cent annualised return, the projected corpus would be approximately ₹1.14 crore.

₹20,000 monthly SIP

Investing ₹20,000 every month for 16 years would mean a total investment of ₹38.40 lakh. At an assumed annualised return of 12 per cent, the investment could grow to approximately ₹1.15 crore.

₹25,000 monthly SIP

A monthly SIP of ₹25,000 maintained for 14 years would involve a total investment of ₹42 lakh. Assuming a 12 per cent annualised return, the projected corpus would be approximately ₹1.08 crore.

The calculations above are illustrative projections based on a 12 per cent annualised return and a standard monthly SIP calculation. The actual value of a mutual fund investment may be significantly higher or lower depending on market performance. SEBI's SIP calculator also cautions that such calculations are for illustration only and that stock-market returns do not have a fixed rate and cannot be predicted.

It is also important to remember that SIP is a method of investing in mutual funds and does not itself guarantee returns. Mutual fund investments are subject to market risks, and the value of investments can rise or fall. AMFI states that mutual fund schemes are not guaranteed or assured-return products and that past performance does not guarantee future performance.

Disclaimer: The figures in this article are hypothetical illustrations based on an assumed 12 per cent annualised return and are not a promise or projection of actual returns from any particular mutual fund scheme. Actual returns may vary depending on market conditions, the scheme selected, investment costs and other factors. Mutual fund investments are subject to market risks, including the possible loss of principal. Readers should assess their financial goals, risk tolerance and investment horizon and consult a SEBI-registered investment adviser before making investment decisions.