Recently, we have been hearing news about India becoming the 4th largest economy in the world. But does it really matter to the average Indian whose monthly income is significantly low? No. That is why people need to find new ways to become rich, and that is where mutual funds come in.
Becoming a crorepati, or in our mother tongue, kotisvarudu, is very difficult in this economy. Even so, becoming a crorepati is still a dream that many Indians want to pursue. One realistic way to achieve this goal is to plan and invest wisely to reach 2 crore with mutual funds.
Earning Two Crore With Mutual Funds
Earning 2 crore with mutual funds entirely depends on how much you invest through SIPs, the annual returns, and how long you are willing to stay invested. There is no fixed or magic number of years for investments.
While it is true that there can be a realistic estimation, it is based on commonly likely scenarios and is not 100 percent accurate. The actual time taken can be shorter or longer depending on market performance.
Key Factors You Need To Be Aware Of
Mutual funds help money grow slowly and steadily over time. In India, equity mutual funds usually give 9 to 12 percent returns every year when people stay invested for a long time, but returns are never the same every year.
Sometimes returns look very high, like 17 percent in early 2024, but this does not always happen, so past performance cannot be guaranteed in the future.
When people invest through SIP, their money grows in two ways:
- Compounding: The money earns profit, and then that profit also earns more profit over time.
- Rupee Cost Averaging: Investors buy more units when prices are low and fewer units when prices are high, helping reduce risk when markets go up and down.
Markets never stay the same, so higher returns help people reach 2 crore faster, while lower returns increase the number of years needed.
Inflation also plays an important role because prices increase every year. In India inflation is close to 6 percent, which reduces the real value of money. Because of this, investors should aim for growth that beats inflation even after paying taxes.
Timelines and SIP Investments to Reach 2 Crore
We put some timelines below to show how long it may take to reach two crore with mutual funds using monthly SIP investments if the average return is 12 percent per year.
The formula used for monthly SIP future value is:
FV = P × {[(1 + r)ⁿ − 1] / r} × (1 + r)
What each term means:
- FV = Future value, your target amount, here 2 crore.
- P = Monthly SIP amount.
- r = Monthly rate of return, annual return ÷ 12.
- n = Total number of months invested, years × 12.
Monthly SIP and Time Needed to Reach 2 Crore
- ₹10,000 per month: Around 26 years. Total investment ₹31.2 lakh. Gains about ₹1.69 crore.
- ₹20,000 per month: Around 20 years. Total investment ₹48 lakh. Gains nearly ₹1.52 crore.
- ₹25,000 per month: Around 18 years. Total investment ₹54 lakh. Gains around ₹1.46 crore.
- ₹40,000 per month: Around 15 years. Total investment ₹72 lakh.
- ₹50,000 per month: Around 13 to 14 years. Total investment ₹78 to ₹84 lakh. Gains ₹1.16 to ₹1.22 crore.
- ₹90,000 per month: Around 10 years. Total investment about ₹1.08 crore.
Some Tips You Must Remember
- Start with mutual funds that focus on long-term growth, such as equity or balanced options.
- Use a SIP step-up, where the monthly amount is increased every year, to reach 2 crore faster.
- Use online SIP calculators to adjust numbers based on income and goals.
- Speak with a financial advisor to understand personal risk comfort.
- Stay invested for a longer time because compounding smooths out market ups and downs.
Key Takeaway You Need To Remember
Mutual funds grow money slowly in the beginning, but growth becomes much faster over time because of compounding. Inflation makes simple saving ineffective, while SIPs help build discipline.
Time is the most powerful factor. People who start early, invest every month, and stay invested for a long time have the highest chance of reaching 2 crore with mutual funds comfortably.