Mutual Fund Calculator: How Much Monthly SIP Is Required To Accumulate A Corpus of Rs 10 Cr In 20 Years?

Mutual SIPs are considered as the best long term investments for generating healthy wealth over time. One can stay invested in a mutual fund as long as he or she wants to and SIP can be started from Rs 500. Here. we have taken an example of how much monthly SIP is required to accumulate a corpus of Rs 10 Cr in 20 years. By consulting different industry experts the responses have been shared below with some mutual fund recommendations.

Amar Ranu, Sr. VP and Head - Investment Products and Insights, Anand Rathi Shares and Stock Brokers

Investors can start a SIP of Rs. 76,000 over 20 years at an expected return of 14% to reach 10 crores. However, the investor can start by investing an SIP of only Rs. 44,000 pm and step it up by 10% every year and reach 10 crores in 20 years.

Some of the schemes (in a portfolio) to be considered are Mahindra Manulife Multi Cap Fund, Quant Active Fund, Kotak Equity Opportunities Fund, SBI Magnum Mid Cap Fund, ICICI Pru Small Cap Fund.

Mayank Bhatnagar, Chief operating Officer, FinEdge

First off, its important to know that building a 10 Crore corpus through SIP investing over a 20-year timeframe is not going to be an easy feat! In addition to the obvious act of making short term lifestyle sacrifices and saving a large chunk of your net income very month, it will also require every ounce of investing discipline that you can muster, as well as a stronghold over your innate behavioural biases.

What can work in your favour here is the time frame. The longer the investment horizon, the more risk you can afford to take with your investments - and the more risk you can take, the more you'll benefit from rupee cost averaging and compounding. In other words, the act of "saving" money has little to do with creating such a large corpus - where you channelize the investment matters a lot more.

For a two-decade investment horizon, we would recommend that you invest into small and mid-cap-oriented funds that have the maximum potential for compounding your money.

Assuming a CAGR of 12-13% from small and mid-caps (a reasonable expectation to have for such a long-time horizon), you'll need to invest between Rs. 90,000 to Rs. 100,000 every month through SIP's. If that seems like a huge stretch, fortunately there's another option available: you could start off with Rs. 40,000 per month today and increase your monthly SIP contribution by Rs. 10,000 every year for the next 20 years.

If you're confident that your investible surplus will go up by Rs. 120,000 per annum for the next 20 years, this is probably a better option as it's more sustainable over the long run. Remember, this is going to be a marathon, not a sprint - so any effort that you decide to make will have to be sustainable for a very long time to prove fruitful.

Suman Bannerjee, CIO, Hedonova, a US based Hedge Fund

To calculate the SIP (Systematic Investment Plan) amount required to accumulate a corpus of Rs 10 Crores in 20 years, we need to consider the expected rate of return and the compounding frequency. Assuming an annual compounding frequency and an average rate of return of 12% per annum, the approximate SIP amount required can be calculated using financial planning tools or online SIP calculators. These calculators allow individuals to input their specific parameters and provide the desired SIP amount.

Suggested mutual funds:

Large Cap Funds: These funds invest in well-established and financially stable companies with a large market capitalization. Examples include HDFC Top 100 Fund and SBI Bluechip Fund.

Diversified Equity Funds: These funds provide exposure to a mix of large, mid, and small-cap companies across various sectors. Examples include Axis Long Term Equity Fund and ICICI Prudential Equity & Debt Fund.

Balanced Funds: These funds allocate investments between equity and debt instruments to provide a balance between growth and stability. Examples include HDFC Balanced Advantage Fund and Mirae Asset Hybrid Equity Fund.

Aashika Jain, financial expert and editor, Forbes Advisor

Systematically investing money in the stock market is among the safest ways to invest with the added benefits of a fair degree of stability and possible tax rebates. While SIPs have delivered remarkable results in the last five years owing to extreme market volatility amid Covid-19 and economic recovery, it would be wise to assume returns such as that of 30-35% for a sustained 20 years aren't viable.

For an individual to be able to build a corpus of INR 10 cr in 20 years, they need to simply start with a base investment of INR 51,000 per month. If we look at the average annual return of mutual funds and understand an average of 12% returns to be an achievable target year-on-year, a top-up annual increase of 10% per year is the ideal plan to achieve your target of INR 20 cr by the end of twenty years.

India's findings across mutual fund categories reveal the top SIP mutual funds that can help you accumulate a solid corpus are these below:

· Quant Tax Plan - Direct Plan
· Canara Robeco BlueChip Equity Fund - Direct Plan
· Quant Large and Mid Cap Fund - Direct
· PGIM India Midcap Opportunities Fund - Direct Plan
· Quant Small Cap Fund - Direct Plan

CA Manish Mishra, Virtual CFO

To calculate the monthly SIP required to build a corpus of Rs. 10 Crore in 20 years, considering an average Mutual Fund scheme ROI of 30% and inflation at 6%, we can use the future value of an annuity formula.
The formula for the future value of an annuity is:

FV = P * [(1 + r)^n - 1] / r
Where: FV = Future Value (Rs. 10 Crore) P = Monthly SIP r = Monthly interest rate (30% / 12) n = Number of periods (20 years * 12 months)

First, we need to calculate the monthly interest rate and the number of periods: r = 30% / 12 = 2.5% (0.025) n = 20 years * 12 months = 240 months.

Next, we substitute the values into the formula and solve for

P:10,00,00,000 = P * [(1 + 0.025)^240 - 1] / 0.025
Simplifying the equation further:

10,00,00,000 = P * (1.025^240 - 1) / 0.025
P * (1.025^240 - 1) = 0.025 * 10,00,00,000
P * (1.025^240 - 1) = 25,00,00,000
P = 25,00,00,000 / (1.025^240 - 1)

Using a financial calculator or spreadsheet software, we can calculate the monthly SIP required:
P ≈ Rs. 26,746.

Therefore, approximately Rs. 26,746 per month SIP is required to build a corpus of Rs. 10 Crore in 20 years, considering the given parameters.

Regarding the suggested schemes for investment, here are the schemes you mentioned:

• Quant Small Cap Fund Growth Option Direct Plan
• Quant Tax Plan Growth Option Direct Plan
• Quant Mid Cap Fund Growth Option Direct Plan
• Tata Small Cap Fund Direct Growth
• Nippon India Small Cap Fund - Direct Plan - Growth Plan
• Motilal Oswal Midcap 30 Direct Growth

It's important to do thorough research, consider your financial goals, risk tolerance, and consult with a financial advisor before making any investment decisions.

Anant Jain, Partner Legacy Growth

Albert Einstein famously referred to compounding interest as the eighth wonder of the world and those who understand it earn it and those who don't will pay it. Longer the time horizon of investment, lesser the investment amount due to compounding impact.

If a person starts with a target corpus of INR 10 Cr at the end of 20 years, then he would have to invest appx INR 1,00,000 per month assuming a return of 12% per annum which for an investor could be a larger sum.

To meet the target corpus of INR 10 Cr at the age of retirement / for a particular event, following strategies could be adopted:

Investment period of 30 years - The monthly SIP would be appx INR 28,500 with a return of 12% per annum (Gross investment - INR 1.03 Cr)

SIP amount is step-up by 5% annually with investment period of 30 years - The monthly SIP would be appx INR 20,000 with a return of 12% per annum (Gross investment - INR 1.60 Cr)

Selection of a mutual fund depends upon the market scenario and sector performance etc. However, for a naive investor, investment in a Nifty Index based fund (which is a replica of 50 companies part of Nifty Index) always is a safe bet which does not depend upon the capability / performance / biasness of a mutual fund manager.

Somya Srivastava, CEO, Prayatna Microfinance

To accumulate a corpus of Rs 10 Cr in 20 years, it is advisable that investors need to first understand their risk limitation and comfort with market volatility. You can plan for an optimal amount of SIPs either in equities or diversified across asset classes. One should have a monthly SIP of Rs 1 lakh growing at approximately 12% annually to reach Rs 10 crore in 20 years. Alternatively, a SIP of Rs 1.3 lakhs across diversified asset classes grows at approximately 10% to reach Rs 10 crore.

CA Aditya Sesh, Founder and Managaing Director of Basiz Fund Service Private Limited

Generally, a SIP of 25,000 per month in a balanced MF that will be saved for the next 15 years should give an end corpus of about 1 crore 20 lakhs. This assumes that the investment achieves around a 12% return every year, which is more or less a good balance fund.

Pamarty Venkataramana ( PVR ) is an International Corporate Lawyer from New Delhi, lndia. A Prolific Columnist on Business, Commerce and Policy matters

To accumulate a corpus of 10 crore in 20 years through a Systematic Investment Plan (SIP), the monthly investment amount needed would depend on the expected rate of return from the mutual funds chosen. Based on the assumed annual return of 12% and the investment tenure of 20 years, the approximate monthly SIP amount required to accumulate a corpus of 10 crore would be around 1,25,000 INR.

Some mutual funds that have shown consistent performance and have the potential to provide long-term growth includes Mirae Asset Large Cap Fund HDFC Mid-Cap Opportunities Fund Axis Bluechip Fund SBI Small Cap Fund ICICI Prudential Multicap Fund Aditya Birla Sun Life Equity Fund etc. These mutual funds have a track record of delivering consistent returns over the long term. However, it's crucial to conduct thorough research, consider risk appetite, and consult with a financial advisor before making any investment decisions. Mutual fund investments are subject to market risks, and past performance is not indicative of future returns. Additionally, it is advisable to review and rebalance the portfolio periodically based on changing market conditions and financial goals.

Gautam Kalia, Senior VP and Head Super Investor at Sharekhan by BNP Paribas

Investors should start SIPs totalling Rs.1,01,000 pm to create a corpus of Rs.10 Crs in next 20 years (assuming a return of 12% pa). Investor can start these SIPs in below Mutual fund schemes.

Mutual Funds

Scheme Name	Category	% of Allocation
ICICI Prudential Bluechip Fund	Large Cap	40%
Mirae Asset Midcap Fund	Mid Cap	30%
Tata Small Cap Fund	Small Cap	30%
HDFC Flexi Cap Fund	Flexi Cap	30%

Disclaimer

We do not recommend investment decisions and only provide information by consulting industry analysts. Neither the author, nor Greynium Information Technologies, nor the brokerage firm should be held responsible for losses based on the above article. Please consult a professional advisor before investing.