I save around Rs. 20,000 every month. Can Mutual Funds make me a crorepati? If yes, what should I do to earn Rs. 1 crore?
Sudam Mehta
You want to accumulate Rs. 1 crore by investing around Rs. 20,000 a month. It is quite possible, but it would not happen overnight. You will need to make investments in a disciplined manner and stay invested for the long term. One way to ensure disciplined investing is to opt for a Systematic Investment Plan (SIP).
Apart from disciplined investing, you will also need to be smart about the products in which you invest. Equity Mutual Funds are a good choice, as their ability to give inflation-beating returns in the long term is unmatched.
While there is no guaranteed or fixed rate of return that you can expect from your Equity Mutual Funds, you can refer to past returns as an indicator. Here are some of the most popular Equity Fund categories and what they have delivered in the past to get a hint of what you can expect from your returns.
| Category | 10-year Return |
| Large Cap | 13.50% |
| Large & Mid Cap | 15.94% |
| Flexi Cap | 14.52% |
As the above table shows, there are no fixed returns from Equity Mutual Funds, but you can expect an average annual return of 10-14% if you invest in Equity Funds. Now, let’s look at different scenarios and check how many years it will take to fulfill your dream of becoming a crorepati.
| Monthly Investment | No. Of Years Required To Become Crorepati at 10% Average Annual Return | No. Of Years Required To Become Crorepati at 12% Average Annual Return | No. Of Years Required To Become Crorepati at 14% Average Annual Return |
| Rs. 20,000 | 17 years | 15 years | 14 years |
The number of years it will take to reach your target of Rs. 1 crore will largely depend upon the returns you get. It is better to assume that you will get the lowest rate of return from the above table and set your expectations accordingly. If you earn better returns and reach your target faster, it is never a bad thing.
You can select either one Equity Fund or a couple of Equity Funds from different categories such as Large Cap, Mid Cap, Flexi Cap, etc. To find thebest Equity Funds, you can useETMONEY’s Fund Report Card. And check various indicators of the scheme such as return consistency, their ability to protect the downside, ETMONEY Rank, etc.
Written By Sridhar Sahu
Sridhar Kumar Sahu is a Content Writer for ET Money. He has over six years of experience in covering personal finance topics and markets. He holds a Master’s degree in English Journalism from IIMC, New Delhi and B.Tech in Mechanical Engineering from BPUT, Odisha.
