This formula can make even those earning 30 thousand rupees a month a millionaire in 21 years… People will ask you what kind of brain you have, boss!

Earning money is one thing and creating a huge fund from it is another thing. Even those earning well are sometimes not able to save much money. The reason for this is not being able to manage savings and investments from the earnings properly. Here know the method that can make even a person earning only 30,000 rupees a month a millionaire in just 21 years.

There was a time when being a millionaire used to be a big deal, but in today's time even a person earning a modest income can make himself a millionaire. For this, you do not need any lottery, but a magical tool of financial planning and this tool is Step-Up SIP. Even if you earn a meager amount of ₹ 30,000 every month, you can easily make yourself a millionaire through this, that too in just 21 years. For this, you will just need patience and disciplined investment. Here know the formula that will make you the owner of more than 1 crore in 21 years.

First understand the difference between SIP and Step-up SIP?

SIP (Systematic Investment Plan)

This is a way of investing in mutual funds, in which you invest a fixed amount every month in a selected mutual fund scheme. This habit makes you a disciplined investor.

Step-Up SIP

This is an advanced and more powerful version of SIP. In this, you increase your initial SIP amount by a fixed percentage (such as 10% or 15%) every year. This simply means - just like your salary increases a little every year, you also give a little 'increase' to your investment. This small change has a huge impact on your final return.

How to become a millionaire in 21 years

This formula to become a millionaire is 10/12/21. In this, 10 means annual top-up of 10%, 12 percent means 12 percent return and 21 means investing for 21 years. Through this formula, to become a millionaire in 21 years, you have to start SIP with Rs 5,000. Every year a top-up of 10% will have to be applied in it. The average return of SIP is considered to be 12 percent. If you get that return, then in 21 years you will save more than 1 crore.

Game of numbers: How will ₹ 5,000 become ₹ 1 crore?

Let us now understand the calculation that can turn this dream into reality. For this, we have to assume a few things:

Initial monthly SIP: ₹5,000

Annual step-up: 10%

Investment period: 21 years

Estimated annual return: 12% (Generally good equity mutual funds can give returns of 12-15% or more in the long term, but this is subject to market risks).

Let us now see what will happen after 21 years:

Your total investment: In these 21 years, you will gradually accumulate around ₹38,40,150 lakh.

Magic of compounding: On this investment, you will get a return of around ₹70,22,858 lakh at the rate of 12%.

Your final amount: At the end of 21 years, you will have a total fund of ₹1,08,63,008.

SIP

If you get this return of 15%, then after 21 years you will be the owner of a total of Rs 1,47,95,325.

How will this be possible for someone who earns Rs 30,000 per month?

There is a rule of investment. It is said that every person should save and invest at least 20% of his income. If you earn Rs 30,000 every month, then according to 20%, it will be Rs 6,000. Here you are being asked to start investing with just Rs 5,000. This is not a big deal. After this, every year as your income increases, you can put a top-up of 10% in it.

Why is step-up SIP so effective?

Double the power of compounding

In SIP, you get income on your income as well, which is called compounding. When you increase your investment every year, you are fuelling this magical power, which makes your money grow faster.

In sync with your rising income

Typically, the salary of salaried people increases by 8-10% every year. Step-up SIPs increase your investment in line with your rising income, without making you feel overburdened.

Achieving goals sooner

Step-up helps you achieve your financial goals, such as retirement, children's education or buying a home, well in advance.

Beat inflation

This strategy helps you beat inflation easily, so that the real value of your money does not erode over time.

How to get started?

Complete KYC: You need to have a PAN card, Aadhaar card and a bank account to start investing. Complete your KYC process.

Choose the right fund: Choose a good equity mutual fund (such as large-cap, flexi-cap or index fund) as per your risk appetite. Choose the step-up option: While starting a SIP through any good investment app or website, make sure to choose the 'Step-Up' or 'Top-Up' option and set an annual increase of 10%.

Be patient and stay invested: The most important rule is not to panic due to market fluctuations and stay invested for the long term.