If you want to have enough money to live your life well, then you have to prepare for it now. The earlier you start, the more funds you will be able to raise for your retirement. Let’s try to understand how long it will take to build a retirement fund of Rs 1 crore by investing Rs 10,000 every month in a systematic investment plan (SIP).
For a retirement fund of Rs 1 crore, we will calculate here based on 10%, 12%, and 14% annual rates of return on investment. Past trends with regard to returns on mutual fund SIPs show that the 10-14% CAGR is moderate and can be easily achieved. Let’s see how an investor of 25 years of age can invest Rs 10,000 every month and earn Rs 1 crore at different rates of return.
SIP: 10% annual return
Time to reach 1 crore fund: 22.5 years (age 47.5 years)
Total investment: Rs 27 lakh
Expected Profit: Rs 74.64 lakh
Total fund in 22.5 years: Rs 1.02 crore
In this sense, a 25-year-old person can become a millionaire in 22.5 years by investing Rs 10,000 per month in mutual funds through SIP.
SIP: 12% annual return
Time to reach 1 crore fund: 20 years (age 45 years)
Total investment: Rs 24 lakh
Expected Return: Rs 76 lakh
Total Fund: Rs 1 crore
A retirement fund of Rs 1 crore can be achieved in 20 years with a 12% annual return on an investment of Rs 10,000 per month.
SIP: 14% annual return
Time to reach 1 crore fund: 18.5 years (age 43.5 years)
Total investment: Rs 22.2 lakh
Expected Return: Rs 83 lakh
Total Fund: Rs 1.05 crore
With a 14% return on investment of Rs 10,000 every month, investors can achieve the target of Rs 1 crore fund in just 18.5 years.
