If you invest ₹5,000 every month, how long will it take to become ₹1 crore? Learn the right way to invest.

According to SIP calculations, if an investor invests ₹5,000 every month and earns an average annual return of 12%, it could take approximately 2.6-2.7 million years to build a corpus of ₹1 crore.

If you, too, dream of becoming a millionaire by saving small amounts every month, then a SIP (Systematic Investment Plan) could be a good option for you. Many people believe that building a corpus of ₹1 crore requires a large salary or a substantial lump sum investment. However, in the long run, even small amounts can achieve a significant goal. Compounding plays a crucial role in this. So, let us tell you today how many days it will take to become ₹1 crore if you invest ₹5,000 every month, and what is the right way to invest.

When will a ₹5,000 SIP become ₹1 crore?

According to SIP calculations, if an investor invests ₹5,000 every month and earns an average annual return of 12%, it would take approximately 2.6 to 2.7 million years to build a fund worth ₹1 crore. During this time, the total investment would be around ₹15.60 to ₹16.20 lakh. However, due to compounding, the total fund can exceed ₹1 crore, meaning the real impact lies in the return on returns.

How does compounding create a large fund?

Growth through compounding is slow in the initial years of investment, but over time, returns on returns also accrue. The value of the investment increases rapidly in the final few years. This is why sticking with SIPs for the long term is considered crucial. Stopping investments midway can impact larger targets. Equity mutual funds have delivered an average return of 11 to 13% over the long term. However, these returns depend on the market and are not guaranteed. Investors who continue their SIPs, even during market fluctuations, can reap good results in the long run.

How to invest Rs. 5,000?

Experts believe that instead of investing the entire amount in a single fund, it's better to split it into two parts. For example, investing Rs. 3,000 in an index fund and Rs. 2,000 in a flexi-cap fund maintains portfolio balance and reduces risk. If an investor wants a combination of equity and debt, a hybrid fund can also be a good option. If an investor increases their SIP by 10 percent each year, the target of Rs. 1 crore can be achieved quickly. Increasing investments as income increases makes a significant difference in the long run. Furthermore, experts advise investing in equities only if your target is at least 5 years or more. Stopping SIPs when the market falls is considered a big mistake, and funds with high expense ratios should be avoided.