A Rs 1 crore financial journey in a decade

Picture this: You're gazing into the future, where you want to build your dream house in 10 years. But it requires a whopping Rs 1 crore. Now, that might seem unattainable unless, of course, you're a member of the Money Mattress Club!

Such dreams often stir the minds of many, and the questions arise: How can I amass such a colossal corpus? Is it even possible for me? These questions are fairly common. The good news? No matter how lofty your financial aspirations may seem, they're within reach if you chart your course wisely and invest diligently.

Let's delve into the nitty-gritty of this pursuit and figure out what it takes to amass Rs 1 crore in a decade.

SIP - Your best friend

In your quest to accumulate a substantial corpus of Rs 1-2 crore within a decade, your ally is none other than systematic investment plan (or SIP) . Think of it as the financial equivalent of planting seeds that grow into mighty trees over time. It's the art of investing a fixed amount at regular intervals, usually monthly, to construct a substantial financial fortress through disciplined and systematic contributions.

Even if you can commit Rs 5,000 per month, you can nurture a corpus of Rs 60,000 within a year, alongside the generated returns. With determination, an investor can aim for Rs 1 crore in a decade.

Now, you might wonder about market volatility, especially after the tumultuous events of the last decade, including the infamous COVID-19 pandemic. Despite past market turbulence, 10-year SIP returns for typical flexi-cap and aggressive hybrid funds average 13 per cent and 11.41 per cent, respectively. While market risks persist, let's assume the returns as 10-12 per cent to be on the conservative side, also considering current market highs. These are the monthly investments needed to reach that Rs 1 crore milestone:

This means you need to invest roughly Rs 49,700 every month for 10 years, assuming a 10 per cent return on your investments, to reach the Rs 1 crore goal. However, this might still appear challenging for many individuals. This is where step-up SIP comes into play.

Step-up your SIPs

Step-up SIP involves increasing your SIP amount by a certain percentage as your income grows. For example, if you start with an SIP of Rs 10,000 per month and increase it by 10 per cent annually, you'll invest Rs 11,000 per month from the start of the 2nd year, and Rs 12,100 per month from the 3rd year, and so on.

As this table demonstrates, if your investments grow at a rate of 12 per cent per annum and you commit to increasing your investment annually, you could commence your SIP journey with as little as Rs 20,400 each month, increasing it by 20 per cent each year as your income expands.

Don't forget about the villain - inflation

It's not just about amassing wealth; it's about preserving its worth over time. The hard-earned Rs 1 crore you envision having in 10 years won't possess the same value as it does today. Inflation compounds over time, eroding the value of your money.

So, as you navigate this journey towards your financial dream, keep an eye on the ever-present influence of inflation.

For a deeper understanding of how inflation can impact your financial well-being, click here .

So, the path is laid out before you, and the goal is within reach. As you embark on this journey, remember that discipline, diligence, and a strategic approach will make your financial aspirations not only achievable but also secure.

Also read: How to become a crorepati