How to become crorepati? Here is the formula to earn over Rs 1 crore in 10 years
Monthly SIP of Rs 20,000 increased 12% y- o-y would give at least 12% return to the investor that becomes Rs 91,83,000 at the end of ten years, say investment experts.
Banking on the assumption that equity-linked SIPs (Systematic Investment Plans) give around 12 to 13 per cent annual returns and equity-linked mutual funds give around 14-16 per cent returns, if a person invests Rs 5 lakh in equity-linked Mutual Funds and takes an equity-linked SIP where he or she invests Rs 20,000 per month which is increased by around 12 per cent every year, a person can become a crorepati in ten years, say investment experts. Speaking on the strategy that an investor should adopt in this regard, Jitendra Solanki, SEBI registered investment expert told Zee Business online, "Ideally, we assume that a SIP gives around 12-13 per cent annual return while an equity-linked midcap mutual fund may give around 14-16 per cent return if invested for long term means around 10 or more years."
Giving details about the investment and return Solanki said, "If someone has Rs 5 lakh for investment and additionally can invest around Rs 20,000 per month, a mid-cap or small-cap mutual fund is advisable. If he or she increases the monthly investment by 12 per cent annually in his SIP investment as income is expected to grow for any earning person by at least by that percentage. The net investment would be around Rs 55 lakh in ten years and the net money he or she would receive after ten years would be to the tune of Rs 1.07 crore."
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In case the investor doesn't have the lumsump amount and wants to invest just the SIP, the SEBI registered investment expert said the Rs 20,000 per month which is increased 12 per cent annually would give at least 12 per cent return and the money that the investor would get at the end of 10 years would be around Rs 91,83,000.
On Rs 5 lakh investment, tax and investment expert, Balwant Jain said, "It's advisable for the investor to invest his or her Rs 5 lakh in a calibrated manner to minimise risk and maximise return. It would be better if the investor invests through STP (Systematic Transfer Plans) as it helps minimise the market risk." When asked about the return on such investment Jain said that an investor can expect at least 12 per cent return on his or her investment.
Standing in sync with Balwant Jain's views Jitendra Solanki said, "If we assume 12 per cent return on Rs 5 lakh investment as Balwant Jain has suggested, the amount an investor would get at the end of ten years is around Rs 15 lakh." Hence, through investment acumen and disciplined financial planning, one can become a crorepati in ten years.