How much SIP investment is needed to build a ₹7 crore corpus? Understand the 15-year math

Do you invest in SIPs? If so, is it possible to build a corpus of ₹7 crore through SIPs over 15 years? Find out the full calculation for this 15-year period. Read the full story for details.

Can a corpus of ₹7 crore be built in 15 years via SIPs? While the amount sounds massive, achieving this goal is possible with the right investment strategy and a long-term horizon. However, it is essential to understand the math regarding the monthly investment amount and the required rate of return.

If an investor earns an average annual return of 12% and continues their SIP for 15 years, a corpus of approximately ₹7 crore can be created. This requires a monthly investment of around ₹1.5 lakh.

Based on this calculation, the investor would contribute a total of ₹2.7 crore from their own pocket over 15 years. With an average annual return of 12%, the investment could generate gains of approximately ₹4.44 crore. Consequently, the total corpus could reach around ₹7.14 crore by the end of the 15-year period.

How compounding works

Compounding plays the most crucial role here. Returns earned in the initial years help generate further returns down the line. As the investment tenure lengthens, the fund value can grow exponentially.

Starting an SIP of ₹1.5 lakh per month may not be feasible for every investor. In such cases, the 'Step-up SIP' option can be adopted. This involves starting with a smaller amount and increasing the SIP contribution as one's earnings rise. This approach reduces the financial burden in the early years while allowing for higher investments over time.

No guarantee of returns

This entire calculation is based on an assumed average annual return of 12%. In reality, mutual fund returns are not fixed and are subject to market fluctuations. Therefore, while a target of ₹7 crore is achievable, it requires a substantial investment, a long time horizon, and strong market performance. For most middle-class investors, this is a significant financial goal, and SIPs do not offer fixed returns.