₹1 crore is a dream figure for most retail investors. More than half of the queries we receive from our readers is ‘How to become a crorepati by investing xyz amount’. Well, its not a herculean task to accumulate a crore if you start early and continue to invest regularly in a disciplined manner. So,the better questions could be how early you could become a crorepati? Will a crore suffice to fulfill your life goals such as retirement and child education? and so on… Here is a look at some numbers to see how fast will you become a crorepati with a certain amount of investment.
Let’s begin with lumpsum investment. The investment grid given below shows the number of years it will require you to accumulate ₹1 crore if you invest a certain amount in lumpsum. We have assumed different rate of returns to form the investment grid. This will give you some idea about how fast your desired investments will turn into a crore.
For an instance if you have invested ₹20 lakh in a bank FD or any other instruments that fetches similar returns, at around 6% interest rate, it will take you around 28 years to accumulate ₹1 crore. Here’s the grid:
How fast will you become a crorepati with lumpsum investment
Experts always advise to scatter your investments over a time period to average out your cost of purchase. Most retail investors prefer the SIP route where they invest on a monthly basis. The frequency could be weekly, daily, quarterly as well. For illustrative purposes we have assumed monthly investments. Here’s the grid:
How fast will you become a crorepati with monthly SIP
Don’t forget the taxation would also apply to your gains. You will need to adjust your investments accordingly.
SBI Bank FD for a period between five years and 10 years is offering an interest rate of 5.50% p.a. up to deposit of ₹2 crore. Equity multi cap mutual funds on an average have given 7.70% annualised returns in the last five years. Gold funds on an average have given 12.98% annualised returns in the last five years.
₹1 crore might not suffice to fulfill your goals
While this figure with seven zeros looks humongous today, it might not be enough to cater to your financial needs, five or 10 or 15 or 20 years later. The reason as we all know is inflation. Inflation is eating the value of our money constantly. At an annual inflation rate of 6%, a goal that costs you a crore today, would need ₹1.34 crore after five years or ₹1.79 crore after 10 years or ₹3.21 crore after 20 years.
Talk to your financial advisor to choose an adequate target amount for your non-negotiable goals like retirement, child education.