look news india
Every working person dreams of achieving financial freedom and building a solid corpus of ₹ 1 crore by the age of 50. But your investment plays a more important role in achieving this goal. Time (Time Horizon) Plays. The earlier you start, the faster the magic of compounding makes your money grow. Conversely, if the start is delayed by even 5 or 10 years, the monthly savings amount increases by 3 to 4 times to achieve the same target of ₹1 crore.
Let us understand how much amount you need to invest every month at the age of 30, 35 and 40 based on an average annual expected return of 12% if you invest in equity mutual funds through a disciplined Systematic Investment Plan (SIP).
| age of onset | Target age (50 years) | Investment period (years) | Required monthly SIP | Your total out-of-pocket investment | Estimated Wealth Gain (Interest/Return) |
| 30 years | 50 years | 20 years | ₹10,010 | ₹24,02,400 | ₹76,01,164 |
| 35 years | 50 years | 15 years | ₹20,017 | ₹36,03,060 | ₹64,02,112 |
| 40 years | 50 years | 10 years | ₹43,471 | ₹52,16,520 | ₹47,87,314 |
If you take this decision at the age of 30, you have a long time of 20 years.
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Monthly SIP: About ₹10,000 per month
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Your total deposits: only ₹24 lakh
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Profit from compounding: around ₹76 lakh
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conclusion: Here more than 75% of your total wealth comes from compounding interest alone. Starting at a young age doesn’t put any strain on the budget.
If you start at age 35 due to career and family responsibilities, the time reduces to 15 years.
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Monthly SIP: About ₹20,000 per month
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Your total deposits: ₹36 lakh
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conclusion: Due to delay of just 5 years, you will have to invest double the amount every month (₹20,000 instead of ₹10,000). Despite this, the target of ₹1 crore at the age of 50 can be easily achieved.
If you get serious at 40, you only have 10 years left.
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Monthly SIP: About ₹43,500 per month
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Your total deposits: ₹52.16 lakh
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Profit from compounding: ₹47.87 lakh
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conclusion: Here, to raise Rs 1 crore, you will have to contribute more than half of the money (more than Rs 52 lakh) from your own pocket, because the money does not get enough time to grow through compound interest.
If at age 35 or 40 you don’t have the room to start a big SIP of ₹20,000 or ₹43,000 every month, 10% Annual Step-up SIP is the most effective strategy.
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In this, you start with a low monthly amount and increase your SIP by only 10% with every salary increment.
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Example: At the age of 35, if you invest only Rs. 20,000 instead of normal SIP, ₹12,500 per month Start with Rs 1000 and increase it by 10% every year, even then in 15 years you will easily build a corpus of Rs 1 crore.
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Don’t be afraid of market fluctuations: Mutual funds are equity based. Sometimes the market will fall and sometimes it will rise. Never make the mistake of closing SIP during recession, because at that time you get more units at cheaper NAV.
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Proper diversification of portfolio: Do not invest all your money only in small caps. Create a balanced portfolio consisting of 50% flexi-cap/large-cap, 30% mid-cap and 20% small-cap funds.
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Don’t forget inflation: The value of today’s ₹1 crore will reduce after 15-20 years due to inflation. So for post-50s, Rs 1 crore should be the first stop, and keep upgrading your financial target to Rs 2 crore or more as your income increases.