How much to invest for Rs 1 Crore in 20 years?

Becoming a crorepati is most people’s wish in India. Atleast for those who still aren’t. And as an investment advisor, I regularly come across questions like:

  • How to get Rs 1 crore in 20 Years by investing?
  • How much to invest in mutual funds every month to get Rs 1 crore in 20 years?
  • How much to invest in SIP to get Rs 1 crore?
  • How to save Rs 1 crore with mutual funds in 20 years?
  • How can I build a corpus of Rs 1 crore in 20 years?

Questions like these clearly tell that the figure of Rs 1 crore still attracts a lot of people. Many of whom continue searching for ways to become SIP crorepati as early as possible.

But why only this exact figure of Rs 1 crore and more importantly, is this amount actually enough?

To be fair, Rs 1 crore was a big amount in early years. But it will soon become a need for most people instead of the wish it is now. A crore today doesn’t mean as much as it used to mean till 10-15 years back.

So imagine what targeting something like Rs 1 crore after 20 years would mean. Not much maybe. But we will get to that a little later.

First let us try to answer the basic questions that people looking to become SIP crorepati have when trying to save Rs 1 crore in 20 years.

I understand that many of you would want to become a crorepati much faster and as soon as possible. But have patience. Good things take time (for most common people). So don’t expect any theoretical nonsense in this post like here are 5 simple tips to earn Rs 1 crore in 3 years kind of stuff.

I will simply share plain, hard numbers… as usual.

How much to invest to save Rs 1 crore in 20 years?

That is the key question.

And some of your next obvious questions would be:

  • How much should I invest every month to save Rs 1 crore in 20 years?
  • How can I save Rs 1 crore in 20 years?
  • How to get 1 Crore by investing in mutual funds?
  • How much to invest in SIP to get 1 crore?
  • SIP for Rs 1 crore
  • And many similar questions…

Given the investment horizon of 20 years, the best asset to invest in is equity. And for most common investors, the goal of Rs 1 Crore in 20 Years is best achieved by investing in equity mutual funds.

We can safely assume that during such long-term periods, equity can deliver about 11-12% average returns (based on historical nifty returns data). And if investment selection is better, achieving even higher rates of return is possible too.

So for the SIP crorepati calculator lovers, let’s see how much you need to invest every month to save Rs 1 crore in 20 years at different rates of returns:

That’s how much you need to invest every month to become a crorepati.

Do note that due to LTCG tax on equity investments, the actual amount that you need to invest will vary and will be slightly higher.

And as you might have already noticed, higher the return expectations, lower the required monthly investment.

But the problem with high return expectations is that it is seldom met. So even if some equity funds have managed to deliver a good 18-20% returns in the past, it is difficult to predict what returns these funds (or any other equity fund) will give over the next 20 years.

So by keeping our expectations low, the chances of ending up with less than Rs 1 crore are further reduced.

That said, it is advisable to have reasonable expectations when investing in equity.

Assuming you earn 12% average returns, then to accumulate Rs 1 crore in 20 years, you need to save about Rs 10-11,000 per month.

That is the required sip for 1 crore and is the exact amount to invest every month to become a SIP crorepati in 20 years.

In long term, equity is the best choice for investing; and for small investors, investing via small amounts monthly via SIP in equity mutual funds is the best bet.

And once you decide to go ahead with this approach to invest regularly, just stick with it. It works. Also, keep monitoring your mutual fund portfolio closely. There will be times when returns won’t be acceptable. That’s fine. There will be good days and there will be bad days. But what’s important is for you to stick around.

So now you have a clear idea about how much to save to have Rs 1 crore in 20 years. And as is clearly evident, it’s not difficult to become a mutual fund SIP crorepati as you have already heard in so many mutual fund SIP success stories.

But what if you are a conservative investor and don’t want to invest too much in equity?

If that’s the case, then you can still become a crorepati using PPF (Public Provident Fund).

You can try out this FREE PPF calculator (Download here) to do your own analysis or read this detailed post on How to save Rs 1 crore using PPF or How to become crorepati by investing in PPF. It will answer all your PPF crorepati related questions in detail.

But let’s come back to mutual funds.

It’s possible that people have other financial goals and do not have that much surplus every month to save Rs 1 crore in 20 years.

If that’s the case, then how do we get around that?

The answer lies in the scenario of Increasing SIP – Starting out with a much smaller SIP amount, investors can slowly increase monthly investments (as per their increasing income and comfort level) to achieve Rs 1 crore in 20 years at a much comfortable pace.

Here is what I am trying to say. You start small and invest more and more with each passing year.

Assuming the investment delivers 12% average returns, let us assume that you are able to increase your SIP by 5% every year.

So, in the first year you will have an SIP of Rs 7500 per month instead of Rs 10-11,000 for the fixed non-increasing SIP. In the second year, the Rs 7500 SIP will have to be increased by 5%, i.e. to about Rs 7900 and so on every year till the 20th year.

To summarize, if your investments earn 12% return and you have 20 years to save Rs 1 crore, you can take either of two options:

  • Invest Rs 10-11,000 every month continuously for 20 years via SIP
  • Start investing Rs 7500 every month in first year and increase this amount by 5% every year.

So as you have witnessed above, it’s not very difficult to accumulate Rs 1 Crore by investing properly in mutual funds via SIP.

The table shared earlier also acts as your crorepati calculator and tells the exact amount you need to invest per month to become Crorepati in 20 years. So hopefully, now you have some useful and actionable information regarding questions like:

  • How to get 1 Crore after 20 years?
  • Investing to create a corpus of Rs 1 crore in 20 years
  • Can I make a corpus of Rs 1 crore in 20 years?
  • How much should I invest in mutual funds to get Rs 1 Crore?

I have already mentioned that the best approach here is to take the equity route for this. Investing in mutual funds is a great way to build wealth. And the earlier you start the better it is. Here is a super proof for the same.

But I must say that picking the right mutual funds for portfolio is very important.

If you can do fund selection properly without being influenced by the wrong people or blindly following mutual fund star rating (which is wrong), then its fine. But if you genuinely need help and aren’t sure whether your investment plan is right or not, it is much better to get in touch with an investment advisor to help you with good recommended equity mutual fund portfolios that are based on your risk appetite and feasible SIP amounts.

To many, Rs. 1 crore may still look like a big scary figure which may also look unachievable. But don’t worry. You can reach that figure if you aim for that and invest sensibly towards it.

Can I reach Rs 1 Crore faster?

Yes you can.

Its possible if you do any or all of the following 3 things:

  • Invest higher amounts in SIP (see the impact in these examples)
  • Invest early and as soon as possible (Super example of starting early)
  • Invest and hope that the choice of your mutual fund schemes is such that it delivers higher than average (or benchmark beating) returns.

Or here is more help at hand for specific questions:

  • How to reach Rs 1 crore in 15 years
  • How to reach Rs 1 crore in 10 years
  • How to reach Rs 1 crore in 5 years

I know you want to run faster. You want to become a SIP crorepathi really fast. You even secretly search online for how to become crorepati calculator. I know it. 🙂

But let us be realistic.

If you wish to know answer to questions like how to become crorepati in 1 year, how to become crorepati in 2 years OR how to become crorepati in 3 years, then you either need to have a decently large amount to invest upfront or you need to be ready to invest a large amount regularly every month for next 1-3 years and hope for good sequence of returns in next few years. There is no other way to it.

But having said that, you should also understand that anything less than 5 years is not much suitable for equity investing.

So chances of achieving average equity returns (of 12-15%) may be lesser for such short period than those of longer periods like 10, 15 and 20 years.

What if your target is lower than Rs 1 Crore?

Perfectly fine.

Many of you may have questions like, how to make Rs 50 lakh in 10 years, how to make Rs 20 lakh in 5 years, etc. Here is more help at hand for specific questions:

  • How to reach Rs 50 lakh in 10 years
  • How to reach Rs 50 lakh in 5 years
  • How to reach Rs 25 lakh in 10 years
  • How to reach Rs 25 lakh in 5 years
  • How to reach Rs 20 lakh in 10 years
  • How to reach Rs 20 lakh in 5 years

Or if you wish to know how much money you can save up by investing a fixed amount every month, then you can use the links below:

Depending on the monthly SIP you choose, it will take you different durations to reach Rs 1 crore with various monthly SIP amount in chosen mutual funds.

And here is how much time it takes to save Rs 1 crore for different SIP investment amounts and different returns:

This image (shows approx. no. of years) and tells how much to invest in SIP to have Rs 1 crore in Mutual Funds.

What will be the Value of Rs 1 crore after 20 years?

Yes. This is indeed a very important question that all people looking to save Rs 1 crore should be asking.

Rs 1 crore may seem like a big amount today.

But after 20 years, it won’t be that big.

The value of 1 crore after 20 years will not be same as today. Rs 1 crore today IS NOT EQUAL TO Rs 1 crore after 20 years.

And that is obviously due to inflation. The value of money does not stay same forever.

And if you are a retirement saver who is asking ‘How much money is enough to retire in India?’ please understand that Rs 1 crore will be insufficient for your retirement. That won’t happen unless you have a very frugal lifestyle and you assume very low inflation levels in future. And Rs 1 crore will not last for very long.

To give you some perspective, here is the value of Rs 1 crore after 20 years of different inflation:

  • At 4% inflation – Value of Rs 1 crore today will be Rs 45 lakh then
  • At 6% inflation – Value of Rs 1 crore today will be Rs 31 lakh then
  • At 8% inflation – Value of Rs 1 crore today will be Rs 21 lakh then

So looking to how to become crorepati by SIP is fine. But just being a crorepati in future won’t be enough.

Inflation can screw up long term financial planning of people. So never ignore the impact of inflation when saving for your real financial goals.

You don’t want to miss out your goals because of it. So when tackling long-term goals like retirement planning, children’s education, etc., always factor in inflation.

For example – suppose the higher education for your son costs Rs 25 lakh today. But your son is just 2 years old today. So he would begin his higher studies when he turns 17-18, i.e. about 15 years later. But the cost of the course would not remain stable at Rs 25 lakh after 15 years. It will obviously increase. So if you begin saving for the goal of son’s higher education, better to target a inflation-adjusted figure for future.

I guess now you have all your answers to the question of how to become a crorepati in 20 years.

But I would still say one thing – when it comes to investing, it is best to focus on your financial goals and do Goal-based Financial Planning. Just randomly aiming for some figure like Rs 1 crore in 20 years or Rs 1 crore in 10 years or SIP for 1 crore may not help. That’s because you never know whether Rs 1 crore would be sufficient for you or not. And this problem is solved easily if goal-based investing route is taken.

I have been quite vocal about the idea of goal based investing for years now. For most people, it makes sense to identify their real financial goals and invest towards them properly.

So go ahead and please find out your financial goals first (use this Free Excel sheet for Goal Planning), understand how much you need to invest for those goals and then do it.

This is the best and highest probability way to achieve your financial goals.

But nevertheless if you aren’t a conservative saver who wishes to just become a crorepati by investing in PPF and rather want to become a mutual fund SIP crorepati and target some fixed figure – then now you have the answer to your question of How to save Rs 1 crore using mutual funds in 20 years OR How much to invest in mutual funds every month to accumulate Rs 1 crore in 20 years?

So go on and do what is needed. Don’t wait too much.

I pray that you all become crorepati and SIP crorepati and more importantly, aim and achieve your full financial freedom in future or even earlier via Early Retirement and not just have Rs 1 crore in 20 years.

Advertisements

Written by Dev Ashish

Founder - Stable Investor Investing | Personal Finance | Financial Planning | Common Sense

Leave a Reply