Winning Bizness Desk

Mumbai. Your dreams of turning into a millionaire can be achieved with patience, discipline and a smart investment strategy. According to the experts, you can take advantage of market fluctuations by regularly investing small amounts in a Systematic Investment Plan (SIP) that helps you achieve your financial goals. Becoming a millionaire may seem difficult at first, however, if you plan properly, then it is possible. After setting a savings target of Rs 1 crore, one needs to find the best investment option. Equity (shares) investments have given higher returns than debt instruments (FDs or bonds). Equity carries more risk. That he proved to be attractive is another matter. It has the potential to give good returns in the long run.

SIP investment is profitable

When you want to accumulate a large amount like 1 crore, you need to invest in equity mutual funds through Systematic Investment Plan i.e. SIP. When you opt for a mutual fund SIP, you agree to invest a certain amount regularly. Usually even if you start with a small investment every month, the benefits of compounding and rupee-cost averaging help you accumulate a large amount in the long run.It is not advisable to invest a large portion of your income in SIP. Instead, it is important to consistently save 15-20 percent of your monthly salary for long-term financial goals. If you invest less amount, it will take longer to achieve your goal. If you invest Rs 4,000 per month in an equity mutual fund scheme with 12 percent annual returns, it will take you a little more than 28 years (339 months) to accumulate Rs 1 crore.

Rs 1 crore in 20 years

If you increase your monthly investment to Rs 5,000, with an interest rate of 12 percent, you can reduce the time required to save Rs 1 crore to less than 26 years (317 months). So if you invest 30 percent of your salary ie Rs 7,500 per month, you can reach your Rs 1 crore target in 23 years or 276 months, assuming a constant annual interest rate. Besides, if you invest Rs 10,000 per month, which is 40 percent of your monthly salary, you will accumulate Rs 1 crore in 20 years or 248 months. The faster you invest every month, the sooner you will achieve your financial goal of saving Rs 1 crore.

Start SIP with Rs 4,000 and hike this 5% yearly

You can start with a monthly SIP investment of Rs 4,000. In this case, you can increase only 5 percent every year. This way you can reach your target of Rs 1 Crore in approximately 25 years (301 months). A step-up SIP increases your investment amount gradually. If you start investing Rs 4,000 per month, after one year you will increase Rs 4200 per month for the entire second year. In the third year, you will invest Rs 4410 per month. As the SIP amount increases, the time required to reach 1 crore decreases. By starting with 5,000 per month and increasing by 5 percent annually, the target of Rs 1 crore can be reached in a little over 23 years (281 months). A person can become a millionaire in 20.5 years (246 months) if the SIP amount is increased by 10 percent every year.

If you start with a monthly SIP of Rs 7,500..

If you start with a monthly SIP of Rs 7,500 and increase it by 5 percent every year, you can accumulate Rs 1 crore in 20.3 years (244 months). If annual growth is 10 percent, you can achieve your goal in less than 18 years (215 months). If you start investing Rs 10,000 per month in SIP and compound it at 5 percent annually, you can reach Rs 1 crore in 18.3 years (220 months). If you increase the SIP amount by 10 percent every year, you can achieve your goal in just 16 years (194 months). The benefit is that you get compound interest. Systematic Investment Plan (SIP) is considered beneficial for long-term investment. It is important to make a long-term commitment while investing in mutual funds through SIP. Patience and consistent investment over the years is the secret to success.