Dreaming of Building Rs.1 Crore in 10 years? Here is How Much You Should Contribute Monthly
When it comes to financial planning, many individuals aim at building Rs.1 crore in 10 years. However, many fail to do so, as achieving this goal requires lots of patience and disciplined approach. The key question is—how much should one invest each month to achieve this target?
A systematic investment plan (SIP) is one of the best ways to achieve long-term financial goals. But the question arises again: are you investing the enough amount monthly that can direct you towards your goal of Rs.1 crore in 10 years? most of the investors do not know the amount that should be invested to achieve their desired corpus.
How Much to Invest in a Monthly SIP?
According to a calculator, if we assume that the annual return is 12%, an individual should contribute Rs.45,059 per month to build a corpus of Rs.1 crore in 10 years with no initial lump sum amount. The total invested amount in 10 years will be Rs.54.07 lakh, while the remaining amount will be accumulated through compounding.
Compounding allows your money to earn more money over a long period. It is a process where the interest you earn on your investment adds to your original amount, and you earn returns on both your principal amount and the interest it generated. Most investors prefer SIP because of the compounding effect, which is one of its greatest advantages. Being consistent with the monthly contribution can maximize the compounding benefits and ensure that your investment grows over time.
Why Should You Start Investing Early?
It is always advised that individuals should start their investment journey at an early stage. Therefore, do not wait for the right time and start investing even if you are making small contributions. The earlier you start investing, the more time you get to grow your money. You need to contribute a smaller amount each month because you have more time for your money to grow through compounding. But if you wait to start investing, you’ll have less time for compounding to work, and you’ll need to invest a much higher amount each month to reach the same Rs.1 crore goal.
Consistency is the key to achieving your financial goals. Therefore, contribute a regular amount and be patient throughout the whole process. SIPs can be a great way to build up your desired corpus with regular investments. However, there are some factors that experts suggest considering before investing, such as investment horizon, risk tolerance, your current financial situation and your goals.
