Mutual fund calculator: Monthly SIP required to accumulate a corpus of ₹50 Cr in 20 years

Creating a corpus of ₹50 crore is a steep target, but it’s one that can be achieved with the right financial planning and investment strategy. Many investors dream of accumulating such a substantial amount of wealth, but they often don’t know where to start. That’s where mutual fund calculators come in.

Santosh Navlani, COO of ET Money, says that if you want to accumulate a sizable corpus like ₹50 crore in 20 years and assuming you earn a reasonable 12% average annual return, you will need a monthly SIP of nearly ₹5,01,000. While this may look like a massive monthly outflow, there’s an alternative. You can start with a smaller amount and step up your investments every year as your income rises.

To amass ₹50 crore in 20 years, assuming an increase of 10% in investments every year, you will need a monthly SIP of around ₹2,20,000. This amount is less than half of what you would need in a normal SIP, making it more feasible to start with.

Diversification is key in such a long investment journey, where curtailing risk is more important than chasing returns. To accumulate wealth, you must remain invested in the market. For this to happen, it is best to diversify your investments across multiple asset classes like equity, debt, and gold. This strategy will lower the impact of a sudden correction in the market, and you will have the peace of mind to continue your investments for as long as 20 years.

When considering a SIP, it’s not just the potential returns that investors should look at, but also the risk involved. A diversified portfolio is essential to minimize risk and optimize returns. Investors should invest in a variety of mutual funds to manage market fluctuations and achieve their financial objectives.

The following are expert opinions on mutual fund investments to achieve a corpus of ₹50 crore in 20 years:

S. Ravi, Promoter & Managing Partner at Ravi Rajan & Co. LLP

To accumulate a corpus of ₹50 crore in 20 years, investors must adopt a disciplined and strategic approach to investing. The monthly Systematic Investment Plan (SIP) required to reach this target would be approximately ₹11 lakhs. This investment would require a high level of financial stability and commitment. However, for those with significant disposable income, this investment goal may be worth pursuing.

Before investing in mutual funds, investors must consult with a financial adviser. A professional financial adviser can help evaluate the investor’s risk profile and recommend a tailored investment plan. Investors should also conduct thorough research and understand the fund’s objectives and past performance.

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

The investor should start an SIP of Rs.5,05,500 per month to create a corpus of Rs.50 crores in the next 20 years, assuming a return of 12% per annum. If the investor is ready to step up the SIP amount by 10% every year, then they can achieve this corpus by starting an SIP of Rs.2,67,500 per month.

Rinju Abraham, Vice President, Scripbox

If an investor has a target corpus of ₹50 crore and a time horizon of 20 years, I would recommend that they go in with a 100% allocation to Indian Equities. While historically long-term returns for Indian equities have been close to 13% or so, I would recommend a small moderation of return expectations going forward. Assuming that the returns will hover around 10% over the long run, an investor with a monthly SIP of ₹6,50,000 will be able to achieve a ₹50 crore corpus over a 20-year investment period. Alternatively, someone starting with a monthly SIP of ₹3,75,000 and committing to a yearly step-up of 8% should also be able to achieve the same corpus over a 20-year investment period.

Ishkaran Chhabra, Founding Partner, Centricity

To accumulate this corpus in 20 years through monthly SIP, investors would need to invest approximately ₹5 lakh per month, assuming an average annual return of 12%. Investors looking to achieve this goal should consider investing in large-cap funds like SBI Bluechip Fund, HDFC Top 100 Fund, and ICICI Prudential Bluechip Fund, as well as multi-cap funds like ICICI Large and Midcap Fund and HDFC Flexi Cap Fund.

Misbah Baxamusa, CEO of NJ Wealth

In our internal study of 52 equity funds, the average SIP returns stood at 14.18% for 20 years as on 30th April 2023. Assuming a reasonable return of 12%, the common man aspiring to accumulate ₹5 crores in 20 years would need to do a SIP of Rs.54,400 (rounded). However, if one cannot start a fixed SIP of this amount today, one can opt for a step-up or top-up SIP where you increase your SIP savings every year. In our target for ₹5 crore, if one registers the SIP with a top-up of Rs.5,000 every year, the SIP amount required would be just Rs.24,300 (rounded) for the first year.

Gurpreet Sidana, Director & COO, Religare Broking Ltd.

When we talk about a time horizon of 20 years, the investor will witness multiple moderate to major cycles of market corrections. The investor should not depend on a single SIP strategy when eying a massive corpus of ₹50 crore, rather, it is recommended to start an SIP of minimum ₹2 lakh in flexicap, midcap, and small-cap equity funds and diligently step up monthly SIPs by 10-15% annually. Further, the investor should always be open to lumpsum investment opportunities after major market corrections each year. It is advisable to review and rebalance your portfolio with the help of a certified professional every three years.

Shavir Bansal aka BeKifaayti, Finance Expert and Digital Content Creator

Since 20 years is a fairly long term, I would recommend allocating a majority in Equity Funds. Assuming 12% annual returns, investors would need to invest approximately ₹6.5 lakh per month to amass a corpus of ₹50 crore in 20 years. Investors should review and rebalance their portfolio periodically to ensure that the investment objectives are met.

Conclusion

Investors must adopt a disciplined and strategic approach to investing to achieve a corpus of ₹50 crore in 20 years. The monthly SIP required to reach this target would be approximately ₹5 lakh per month, assuming an average annual return of 12%. However, investors can start with a smaller amount and gradually increase their investment limit as their income rises. It is essential to diversify your investments across multiple asset classes to minimize risk and optimize returns. Additionally, investors should consult with a financial adviser, conduct thorough research, and understand the fund’s objectives and past performance before investing in mutual funds. With diligent investing, investors can achieve their dreams of financial independence.