SIP Investment: Want to build a corpus of ₹10 lakh in mutual funds? Find out how much you need to invest via SIP every month..

SIP Investment Plan: Investing in mutual funds via SIPs (Systematic Investment Plans) is a growing trend among salaried individuals and the youth. If your goal is to build a corpus of ₹10 lakh over the next few years, it requires proper planning and discipline.

The biggest advantage of an SIP is that you do not need to invest a large lump sum upfront; instead, you can start by investing a fixed amount every month. Let’s look at the monthly SIP amount required to build a ₹10 lakh fund over different time horizons.

Estimated Return: The 12% Average Formula

Equity mutual funds are generally assumed to yield an average annual return of around 12% over the long term. However, this figure can vary due to market risks. Based on this estimated 12% return, let’s calculate the math behind building a ₹10 lakh fund.

1. ₹10 lakh fund in 3 years

If you wish to achieve this goal within a very short timeframe—specifically, the next 3 years—you will need to make a substantial investment.

Required monthly SIP: Approx. ₹23,218

Total investment over 3 years: ₹8.35 lakh

Estimated return/interest: ₹1.64 lakh

2. ₹10 lakh fund in 5 years

For a medium-term goal of 5 years, the required investment amount decreases significantly because compounding gets more time to work.

Required monthly SIP: Approx. ₹12,244

Total investment over 5 years: ₹7.34 lakh

Estimated return/interest: ₹2.65 lakh

3. ₹10 lakh fund in 7 years

If you have a 7-year horizon, you can reach this target by saving and investing a more modest amount each month. Required monthly SIP: Approx. ₹7,500/month

Total investment over 7 years: ₹6.30 lakh

Estimated returns/interest: ₹3.70 lakh

4. A ₹10 lakh fund in 10 years

For those planning for the long term—specifically a 10-year horizon—this path is quite straightforward. Here, the interest earned begins to outweigh the principal amount.

Required monthly SIP: Approx. ₹4,347/month

Total investment over 10 years: ₹5.21 lakh

Estimated returns/interest: ₹4.78 lakh

'Step-up SIP' makes it even easier.

If you do not have the budget to start with a large SIP of ₹12,000 or ₹7,000 initially, there is no need to be disheartened. You can opt for a 'Step-up SIP.' In this method, you increase your SIP amount by 5% or 10% annually, in line with the increments in your salary.

For instance, if you start with ₹3,000 today and increase the amount by just 10% each year, you will build a ₹10 lakh fund much sooner compared to a standard SIP.

Keep these points in mind when investing in mutual funds:

1- In the initial 2–3 years of an SIP, the magic of compounding may not be immediately visible on your screen because the fund corpus is still small. True wealth creation occurs in the later years once your investment base has grown significantly.

2- Never stop your SIP during a market downturn. During a slump, you are allotted more mutual fund units at a lower NAV (Net Asset Value), which yield substantial profits when the market eventually rises.

3- Consult your financial advisor to select an appropriate portfolio comprising large-cap, flexi-cap, or mid-cap funds.

Disclaimer: This content has been sourced and edited from Money Control. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.