SIP Calculation: How to accumulate Rs 5 crore in 15 years?

Let’s break down the numbers, explore the assumptions, and see how consistent SIPs can help you chase that Rs 5 crore goal over the next 15 years.

Note that this is a general illustration, not focused on any specific mutual fund, assuming a 12% annualized return for basic calculation purposes.

For those not familiar with SIP, a Systematic Investment Plan is an investment approach where a fixed amount of money is invested at regular intervals, usually in mutual funds, so that the investor can enjoy the benefits of rupee cost averaging and compounding.

SIP Calculation: How does a SIP work?

To begin a Systematic Investment Plan (SIP), one has to choose three important factors:

Investment Amount: The amount to be invested on a periodic basis. This could be as low as Rs 100 a month to Rs 1,000, Rs 5,000, Rs 20,000, or even lakhs, depending on one’s income and financial objectives.

Investment Frequency: The frequency of investment, which could be daily, weekly, monthly, quarterly, semi-annual, or annual.

Mutual Fund Scheme or Stock Selection: The amount to be invested is put into a selected mutual fund scheme or, for a stock SIP, into the selected stock.

In most cases, investors diversify their investments, but in this case, we shall not discuss which particular fund to invest in. We shall concentrate only on the total amount required to reach as close as possible to the target of Rs 5 crore in 15 years. For a portfolio analysis, expert advice, and suggestions on funds are available. You can look at the mutual fund stories available here and check the ET Now website for more mutual fund information.

Here, assuming a 12 per cent annualised return, let’s calculate how much you would need to invest each month to potentially reach this goal in just 15 years.

Annualised return: 12 per cent

Investment period: 15 years

SIP Calculation: How much to invest monthly to accumulate Rs 5 crore in 15 years?

If your total SIP investment is around Rs 99,000, you may be able to reach Rs 5 crore in 15 years. Here is the calculation:

(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)

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SIP Calculation: How to accumulate Rs 5 crore in 15 years? – Mutual Funds

SIP Calculation: How does a SIP work?