A systematic investment plan or SIP allows you to invest a specified amount at a specified frequency in a specified mutual fund scheme. For example, you can start a monthly SIP of Rs. 1,000 in Motilal Oswal Nifty Midcap 150 Index Fund.

At the time of SIP registration, you need to give an auto-debit mandate with your bank account details. The amount will be debited from the bank account on a specified date every month. The AMC will credit your account with the equivalent number of scheme units based on the scheme NAV.

<h2>How can a SIP calculator online help you?</h2>

A SIP investment calculator can tell you the amount you will accumulate for your financial goal based on the amount you invest, the investment period, and the expected rate of return. The three input parameters influence your outcome (amount accumulated) in the following manner:

<ol><li>Monthly investment: The general rule is that the higher the amount that you invest every month, the higher the amount you will accumulate. However, the amount available for investment will depend on what is left after deducting monthly expenses from monthly income. The disposable income has to be divided among all investments such as PPF, mutual fund SIPs, insurance premiums, gold, fixed income products, etc. </li><li>Investment period: The general rule is that the longer the investment period, the higher the amount you will accumulate. A longer investment period allows your money to benefit from compounding. Hence, you should start investing early in your career, maybe, the moment you start earning. If your investment period is up to three years, you should consider investing in debt mutual funds. If the investment period is up to five years, you may consider investing in hybrid mutual funds. And, if the investment period is more than five years, then you may consider investing in equity mutual funds. </li><li>Expected rate of return: The general rule is that the higher the expected rate of return, the higher the amount you will accumulate. Higher expected SIP returns come with higher risk. You need to be realistic while assuming your expected rate of return. If you factor in a higher expected rate of return (unrealistic), and if it doesn't materialise, you will not be able to accumulate the expected amount. For equity funds, you should consider an expected rate of return in the 10-12% CAGR. For hybrid funds, you should consider an expected rate of return in the 8-10% CAGR. For debt mutual funds, you should consider an expected rate of return in the 4-6% CAGR. It is always better to be conservative in your expected rate of return. If actual returns are higher than expected, then it is a bonus. But, if the actual returns are lower than the expected rate of return, it can jeopardise investment goals.</li></ol>

<h2>How to use the Glide Invest SIP calculator?</h2>

You can access the Glide Invest SIP calculator here. Assume you are planning to invest Rs. 10,000 a month for your daughter’s higher education. Your investment time horizon is 15 years, and your expected rate of return is 12%.

You need to enter these parameters in the Glide Invest calculator. The calculator will tell you the amount that you will accumulate. The above example will tell you that you are expected to accumulate Rs. 47.59 lakhs. Your total investment will be Rs. 18 lakhs and Rs. 29.59 lakhs will be the additional return on your investment.

To start investing in mutual fund schemes as per your appropriate asset allocation, <a href="https://glideinvest.app.link/KC-get-glide/" target="_blank" rel="noreferrer noopener">click here</a> to download the Glide Invest App.

Find out the returns your SIP investments will generate after a specific period using our SIP calculators.

<h2>Importance of understanding mutual fund returns</h2>



“XYZ Mutual Fund Scheme has delivered 25% returns”. We usually come across such statements in big, bold letters in print media or across the internet.&nbsp; In this article we will understand how these mutual fund returns are calculated, whether for lumpsum investments or SIP investments.



What is not mentioned in big, bold letters is whether these returns absolute returns or annualised returns. We wonder whether these returns are for a lumpsum investment or SIP investments. We also commonly come across terms like CAGR, XIRR, etc. We will also demystify terms like CAGR, XIRR. After reading this article, the next time you come across a headline related to mutual fund returns, you will exactly know what it means.



<h2>Mutual fund returns: Dividend and capital gains</h2>



We can earn returns from mutual funds in the following two ways:



<ol><li>Dividend: The fund manager invests the investors’ money in the mutual fund as per the scheme objective in various financial products like equity shares, debt securities, or a mix of both, etc. For a mutual fund scheme with a dividend option, the fund manager will book profits from time to time when the expected profits are realised or as per the scheme mandate. The profit is then shared with the scheme unitholders in the form of a dividend. This is favourable for people who invest with the objective of getting regular returns on their investments.</li><li>Capital gains: For long-term goals like accumulating a corpus for a child’s higher education or marriage, most mutual fund investors opt for the growth option rather than the dividend option. In such cases, the returns are measured in the form of capital gains. In the case of mutual funds, an investor’s capital gain per unit is the difference between the <a href="https://www.glideinvest.com/blog/mutual-fund-nav-calculation-how-does-it-work/">Net Asset Value</a> (NAV) at the time of sale and purchase. The overall capital gain is the capital gain per unit multiplied by the number of mutual fund scheme units held by the investor.</li></ol>



<h2>Calculating mutual fund returns</h2>



Mutual fund returns can be calculated in different ways depending on the <a href="https://www.glideinvest.com/blog/mutual-funds-investments-lump-sum-vs-sip/" target="_blank" rel="noreferrer noopener">mode of investment (lumpsum or SIP)</a> and the investment time duration (less than one year or more than one year). The below table summarizes how mutual fund returns are calculated depending on the mode of investment and time duration.



<figure class="wp-block-table"><table><tbody><tr><td>Mode of investment and investment time duration</td><td>Mutual fund returns</td></tr><tr><td>Lumpsum for less than 1 year</td><td>Absolute returns</td></tr><tr><td>Lumpsum investment for more than a year</td><td>Annualised returns</td></tr><tr><td>SIP investment for more than a year</td><td>XIRR</td></tr></tbody></table></figure>



While you can always use a mutual fund calculator provided on many websites to calculate returns, you should know how the returns are calculated. Let us understand how mutual fund returns are calculated in each of the above scenarios.



<ul><li>Absolute returns</li></ul>



For a lumpsum investment in a mutual scheme, if your investment time duration is less than 1 year, then you should calculate the absolute returns to analyse how your investment has fared. The formula for this is as follows:



Let us understand this with an example. An investor invested a lumpsum amount of Rs. 50,000 in a mutual fund scheme. After 6 months, the value of her investment is Rs. 55,000 at the time of redemption.



The investor made a profit of Rs. 5,000 on this investment.



We can calculate the absolute return as follows: (5,000 / 50,000) x 100



We get an absolute return of 10%



Absolute returns give you point-to-point returns. It calculates the difference in percentage between the money at the time of sale and at the time of purchase. Hence, this is useful for the calculation of mutual fund returns when the investment time horizon is less than one year.



<ul><li>Annualised returns</li></ul>



When your mutual fund investment time horizon is more than one year, then calculating your returns using absolute returns will not give you the true picture. For a lumpsum investment in a mutual scheme with an investment time duration of more than 1 year, you should calculate the annualised returns or compounded annual growth rate (CAGR) to analyse how your investment has fared. You can calculate the CAGR using the RRI Function in an Excel sheet.



The RRI function requires you to input 3 parameters:



<ol><li>Nper: This is the duration of investment in years</li><li>Pv: The amount that you invested</li><li>Fv: The current value of the investment at the time of redemption</li></ol>



Let us understand this with the help of an example. An investor invested Rs. 50,000 lumpsum in a mutual fund scheme. The value of the investment at the end of 3 years is Rs. 75,000. Let us see how the CAGR will be calculated using the RRI Function in Excel.



As can be seen in the above image, the CAGR in this case, will be 14.47%.



The annualised or CAGR tells you by how much compounded percentage your money has grown each year for the number of years the money was invested. Even though CAGR will give you a fixed number (for example, 14.47% in our example), the growth rate need not necessarily be uniform every year. There can be years when there is negative growth and there will be years when the growth is very high. Annualised returns or CAGR give you a steady compounded annual growth rate.



<ul><li>XIRR (Extended Internal Rate of Return) returns for SIPs</li></ul>



We have seen in the above section how to calculate CAGR for a lumpsum investment with a time horizon of one year. While CAGR is useful for lumpsum investments, what if someone is making periodic investments, for example, a monthly <a href="https://www.glideinvest.com/blog/sip-calculators/">systematic investment plan</a> (SIP). These days, most mutual fund investors take the SIP route for investments. For a SIP investment in a mutual scheme, if your investment time duration is more than 1 year, then you should calculate the XIRR (Extended Internal Rate of Return) to analyse how your investment has fared. The XIRR name or full form may look a little scary. But, before you jump to a readymade SIP calculator, let us tell you it is not that difficult to calculate XIRR. Let us show you how.



You can calculate the XIRR using the XIRR Function in an Excel sheet. The XIRR function requires you to input 3 parameters:



<ol><li>Values: This is the monthly investment over the number of months and the value of the investment as of the date of redemption</li><li>Dates: These are the monthly dates over which the monthly investment has been made including the date of redemption</li><li>Guess: You can leave this field blank</li></ol>



Let us understand this with the help of an example. An investor started a SIP of Rs. 2,000 per month on 1st Oct 2019 and continued investing for 16 months till 1st Jan 2021. He invested a total of Rs. 32,000 over these 16 months. He decides to redeem his investment on 1st Feb 2021. The value of the investment on 1st Feb 2021 is Rs. 38,000. Let us see how the XIRR will be calculated using the XIRR Function in Excel.



The XIRR in this case will be 26.54%.



Please note that the SIP amounts are shown in minus because these are cash outflows from the investor’s pocket. The fund value of Rs. 38,000 is shown in positive as this will be cash inflow for the investor on redemption. If the above calculation seems complex, you can always use a mutual fund SIP calculator available on many websites or apps.



<h2>Presentation of mutual fund returns</h2>



Now that we understand how mutual fund returns are calculated. Let us see how this data is presented by AMCs with the help of a sample. The below image is for Motilal Oswal Large &amp; Midcap Fund.



<div class="wp-block-image size-large wp-image-9670"><figure class="aligncenter"><img loading="lazy" width="1024" height="381" src="https://images.glideinvest.com/wp-content/uploads/2021/04/mutual-fund-returns-glide-invest-3-1024x381.png.webp" alt="mutual-fund-returns-glide-invest" class="wp-image-9670" srcset="https://xandar.glideinvest.com/wp-content/uploads/2021/04/mutual-fund-returns-glide-invest-3-1024x381.png.webp 1024w, https://xandar.glideinvest.com/wp-content/uploads/2021/04/mutual-fund-returns-glide-invest-3-300x112.png.webp 300w, https://xandar.glideinvest.com/wp-content/uploads/2021/04/mutual-fund-returns-glide-invest-3-768x286.png.webp 768w, https://xandar.glideinvest.com/wp-content/uploads/2021/04/mutual-fund-returns-glide-invest-3.png.webp 1353w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>mutual-fund-returns-glide-invest</figcaption></figure></div>



Check how the absolute returns for 1 year for lumpsum amount, CAGR returns since inception for lumpsum amount, and SIP returns have been presented.



<h2>You are now an informed mutual fund investor</h2>



You now understand how mutual fund returns are calculated when planning for your <a href="https://www.glideinvest.com/blog/how-to-plan-your-investments-to-meet-financial-goals/">financial goals</a>. You understand the difference between absolute returns, annualised returns, and XIRR. The next time someone tells you a certain mutual fund scheme has given 25% returns in the last 3 years, be sure to ask them whether these are absolute returns or annualised returns. Also, ask them whether these returns are for a lumpsum investment or a SIP investment? Always remember, an informed investor is an empowered investor!



Now that you understand how mutual fund returns are calculated, you can download the Glide Invest App and start investing to accomplish your financial goals.

How are mutual fund returns calculated?

In the past decade, mutual funds have come to be one of the mainstream investment options in India, with the <a href="https://www.mutualfundssahihai.com/en">Mutual Funds Sahi Hai</a> campaign picking up steam. As of October 31, 2020, <a href="https://www.amfiindia.com/indian-mutual#:~:text=The%20total%20number%20of%20accounts,8.05%20crore%20(80.5%20million).">the total number of mutual fund accounts in India stood at 9.37 crores</a>, making it the 77th consecutive month to witness the rise in the count of Indian mutual fund folios. If you are to invest with a SIP, a SIP calculator is a must have to plan your investment. In this post, we discuss SIP calculators in detail, but let’s first see what a SIP is and why it’s an advantageous investment option for you, shall we?



SIPs are gradually becoming the preferred mode of investment for Indian investors, as shown by the fact that right alongside the number of total MF accounts, the number of SIP accounts in India continues to hike up. The <a href="https://www.amfiindia.com/mutual-fund">total number of SIP accounts rose to 3.37 crores in October</a>, as compared to the 3.33 crores of September 2020. SIP contributions, as of October, stood at INR 7,800 crores, as opposed to the INR 7,788 crores seen in September.



<h2>What&#8217;s a SIP?</h2>



A SIP, or a Systematic Investment Plan, is one of the two ways you can go about investing in a mutual fund, the other being the lump sum investment method. While with a lump sum investment, you have to invest the total amount at once, a SIP allows you to invest a small sum every so often in your preferred mutual fund scheme.



When you start a mutual fund SIP investment, you allow an auto-debit of a fixed amount of money from your registered bank account at regular intervals (i.e., daily/weekly/monthly/quarterly) into the mutual fund of your choice. With your ability to choose your investment amount, tenure, and investment frequency, a systematic investment plan works as a flexible investment opportunity.



<h2>Why Should You opt for a SIP Investment?</h2>



There are some specific <a href="https://www.glideinvest.com/blog/mutual-funds-investments-lump-sum-vs-sip/">advantages to the SIP method</a>, including:



<ol><li>Lower impact of market volatility: With the lump sum method, you make a one-time investment. So it’s obvious that market conditions at the time will leave a permanent effect on your returns, which may or may not prove to be profitable. But with a SIP, you invest a fixed sum at regular intervals regardless of market conditions. This is also known as rupee cost averaging approach since your costs are averaged over every investment. This naturally means you absorb relatively lesser risks from market volatility and get a comparatively higher return for a lower average price. For example, assume that the Net Asset Value (NAV) for a mutual fund is ₹ 10. If you invest an amount of ₹ 500 in that mutual fund via a SIP, you’ll be allotted 10 units. Now, if the NAV of the mutual fund decreases to ₹ 9, you would have the opportunity to pick up more units for the same amount of investment.</li></ol>



<div class="wp-block-image size-large wp-image-4640"><figure class="aligncenter"><img loading="lazy" width="1024" height="334" src="https://images.glideinvest.com/wp-content/uploads/2021/03/sip-investment-1024x334.png.webp" alt="sip-investment-glide-invest.png.webp" class="wp-image-4640" srcset="https://xandar.glideinvest.com/wp-content/uploads/2021/03/sip-investment-1024x334.png.webp 1024w, https://xandar.glideinvest.com/wp-content/uploads/2021/03/sip-investment-300x98.png.webp 300w, https://xandar.glideinvest.com/wp-content/uploads/2021/03/sip-investment-768x251.png.webp 768w, https://xandar.glideinvest.com/wp-content/uploads/2021/03/sip-investment.png.webp 1262w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>sip-investment-glide-invest.png.webp</figcaption></figure></div>



<ol><li>There’s also a certain sense of flexibility associated with a SIP investment. If you have a regular income (i.e., monthly salary/pension), you can invest in a mutual fund without making a change in your usual lifestyle; you don’t have to curb your regular spending to invest a sizable amount of money at once.</li><li>As your investment generates returns over time, with a SIP, they get added to the original capital you’d invested, increasing the returns. This particular phenomenon is known as <a href="https://www.glideinvest.com/blog/why-you-should-start-investing-early/">compounding</a>. For example, say you invest in a monthly SIP of Rs 100 to begin with and it generates 1% return in a month. In the next month, you would now generate returns on a principle of Rs 201 (Rs 100 being your new SIP amount, and Rs 101 being your previous principal and return). Similarly, in the third month, this amount would be Rs 303.01 (100 + 203.1)</li></ol>



<h2>Types of SIP investment:</h2>



There are several <a href="https://www.glideinvest.com/blog/types-of-mutual-funds/" target="_blank" rel="noreferrer noopener">types of mutual fund</a> SIPs available in the market right now, like:



<ol><li>Top-up SIP: A top-up or step-up SIP investment automatically increases your investment amount by a certain percentage at predetermined intervals. For example, let’s assume you start investing with INR 1,000 SIP in a mutual fund scheme. With a top-up SIP, you can instruct the fund house to increase the SIP amount by INR 500 every six months. So after the first six months,&nbsp; your monthly SIP will rise to INR 1,500. In the thirteenth month, it will once again increase by INR 500 and become INR 2,000, and so forth.</li><li>Perpetual SIP: With a perpetual SIP investment, there’s no fixed end date to your investment. Your periodic installments are deducted until you instruct for them to be stopped.</li><li>Flexible SIP: As the title probably suggests, a flexible SIP investment allows you to increase or decrease your periodic investment amount as per your preferences and cash flow. For example, you may be asked a week before your SIP date whether you’d like to invest more (or less) than your fixed amount. For that particular deduction, your new preference shall apply.</li><li>Trigger SIP: This type of mutual fund SIP is mostly used by experienced investors. It essentially lets you set a trigger so you can automatically redeem an MF scheme or shift from one plan to another if the market gets volatile. For instance, you can instruct your fund house to withdraw the SIP amount from your bank account and use it to purchase units of the MF scheme of your choice only if the NAV of the scheme falls to or below a specific level.</li></ol>



Suppose you invest INR 10,000 in an equity MF scheme and buy 1000 units in the NAV of INR 10. Let’s say you now choose a trigger SIP and request your fund house to switch your returns to an income MF scheme once your investment generates 20% returns. So now, whenever the NAV of your investment grows by&nbsp; 20% &#8211; i.e., if it reaches INR 12, INR 2000 would get automatically transferred to the income scheme you chose.



Alternatively, with a trigger SIP, you can also request a fund transfer if your investment falls to or below a particular level.



So now that you hopefully have a good idea of why a mutual fund SIP can be a beneficial investment for you, let’s take a look at what a SIP calculator is and why you should use one.



<h2>What&#8217;s a SIP Calculator?</h2>



A SIP calculator is a tool you can use to figure out what sort of returns you might get on a mutual fund investment made through a SIP method.



Based on an expected annual return rate, a SIP calculator can give you an estimate of the returns you can anticipate from any of your periodic SIPs. However, keep in mind that the actual returns you’d receive might vary owing to several factors. For instance, a SIP calculator doesn’t account for any exit load (the fee charged for redeeming your holdings before a specific period) or expense ratio (the fund management fee, along with some additional costs).



<h2>How to Use a SIP Calculator</h2>



To use a SIP calculator, all you have to do is enter the following information:



<ul><li>The fixed interval at which you want to make your investment</li><li>The amount you’d be depositing periodically with the SIP</li><li>The maturity period of your SIP</li><li>The expected rate of return</li></ul>



Once you give the input, the SIP calculator will produce the estimated amount you’ll receive at the end of your investment.



<h2>How Does a SIP Calculator Work?</h2>



This is the formula a mutual fund SIP calculator uses to show you an estimated return amount:



<div class="wp-block-image size-full wp-image-4641"><figure class="aligncenter"><img loading="lazy" width="512" height="146" src="https://images.glideinvest.com/wp-content/uploads/2021/03/sip-calculation.png.webp" alt="sip-calculation-glideinvest.png.webp" class="wp-image-4641" srcset="https://xandar.glideinvest.com/wp-content/uploads/2021/03/sip-calculation.png.webp 512w, https://xandar.glideinvest.com/wp-content/uploads/2021/03/sip-calculation-300x86.png.webp 300w" sizes="(max-width: 512px) 100vw, 512px" /><figcaption>sip-calculation-glideinvest.png.webp</figcaption></figure></div>



Where,



FA = Future amount



P = The amount you invest at regular intervals through the SIP



i = Compounded rate of return



n = Your investment duration (in months)



Now, let’s take a look at an example:



Let’s assume you plan to invest Rs. 2000 every month for 24 months, and your expected annual rate of return is 12%.



So now we have i = 12%/12 = 0.01



Therefore, in this case,



FA = 2000 * [(1+0.01)24 -1] x (1+0.01)/0.01



FA = 2000 * [1.0124 -1] x1.01/0.01



FA = 2000* [1.0124 -1] x 101



FA = 54,486



The future value of your portfolio is therefore 54,486, and your returns are 54,486 &#8211; 48,000 = 6,486.



<h2>What are the Advantages of Using a SIP Calculator?</h2>



<ol><li>Assuming that no external factors affect your return upon maturity, a SIP calculator can give you an estimation of the magnitude of returns you’ll get out of your SIP investment; since there’s no risk of human error.</li><li>A SIP calculator lets you make more informed investment decisions since you can forecast your different investment plans and compare the outcomes.</li><li>With a SIP calculator, you can also change the tenure or the investment amount to see how it impacts your SIP for maximized returns.</li></ol>



In conclusion, you should undoubtedly utilize a mutual fund SIP calculator to estimate the best possible profits out of your investment and put your future earnings to an advantage.



Happy investing!

SIP Calculators and How it Works

“Kaun Banega Crorepati” is one of the most popular shows on Indian television. The feelings and emotions of crores of people are attached to the one crore number. This shows the impact of the magic number of ₹ 1 crore. In this article, we will discuss SIP &amp; step-up SIP can help you to make your first one crore 



<h2 id="h-using-budgeting-to-save-money">Using budgeting to save money</h2>



To start your one-crore journey, you first need to start saving money to invest it. To <a href="https://www.glideinvest.com/blog/how-to-have-fun-in-your-20s-and-save-for-your-financial-goals" target="_blank" rel="noreferrer noopener">save money</a>, you can follow one of the budgeting systems.



 1. 50/30/20 &#8211; Budgeting system



You can get started with the 50/30/20 budgeting system. As per this method, you can divide and spend your monthly income into three broad categories:



<ul><li>50% on needs (essential or non-negotiable spending)</li><li>30% on wants (discretionary spending)</li><li>20% on savings and investments (for an emergency fund, life and health insurance, financial goals, etc.)</li></ul>



With this budgeting method, you will have 20% of your income available for investing in mutual fund <a href="https://www.glideinvest.com/blog/how-sip-investments-help-you-benefit-from-volatile-markets" target="_blank" rel="noreferrer noopener">systematic investment plans (SIPs)</a>. These investments will help you to start your journey towards making your first one crore.



 2. Pay yourself first &#8211; budgeting system.



Once you get comfortable with the 50/30/20 budgeting system, you can consider shifting to the pay yourself first budgeting system. As per this method, you first need to save and invest towards your financial goals. The remaining monthly income can then be used for regular monthly expenses. As you will have more money available for investing, this budgeting method will accelerate your journey towards making your first one crore.



<h3 id="invest-the-saved-money-to-make-your-first-one-crore">Invest the saved money to make your first one crore</h3>



By following the budgeting system, you have saved the required amount. Now, you need to invest it in realising your <a href="https://www.glideinvest.com/blog/7-important-investment-goals-to-consider-2/" target="_blank" rel="noreferrer noopener">financial goal</a> of Rs. 1 crore. The sooner you start investing, the lower the amount that you will have to invest. An early start allows you to benefit from the magic of compounding.



Let us understand how you can benefit from <a href="https://www.glideinvest.com/blog/how-does-compound-interest-play-a-role-in-investments/" target="_blank" rel="noreferrer noopener">compounding</a> with the help of an example. Avinash (age 25 years), Bhushan (age 30 years), and Chetan (age 35 years) want to accumulate a corpus of Rs. 1 crore by retirement (age 60 years). All three of them are investing in mutual funds and are expecting a return of 12% CAGR. Let us see how much will each of them have to invest to reach Rs. 1 crore.



<figure class="wp-block-table is-style-stripes"><table><tbody><tr><td class="has-text-align-center" data-align="center"> Investor</td><td class="has-text-align-center" data-align="center">Investment Tenure</td><td class="has-text-align-center" data-align="center">Expected return</td><td class="has-text-align-center" data-align="center">Annual Investment (in ₹)</td><td class="has-text-align-center" data-align="center">Monthly Investment (in ₹)</td></tr><tr><td class="has-text-align-center" data-align="center">Avinash (age 25 years)</td><td class="has-text-align-center" data-align="center">35 years</td><td class="has-text-align-center" data-align="center">12% CAGR</td><td class="has-text-align-center" data-align="center">20,684</td><td class="has-text-align-center" data-align="center">1,724</td></tr><tr><td class="has-text-align-center" data-align="center">Bhushan (age 30 years)</td><td class="has-text-align-center" data-align="center">30 years </td><td class="has-text-align-center" data-align="center">12% CAGR</td><td class="has-text-align-center" data-align="center">36,997</td><td class="has-text-align-center" data-align="center">3,083</td></tr><tr><td class="has-text-align-center" data-align="center">Chetan (age 35 years)</td><td class="has-text-align-center" data-align="center">25 years </td><td class="has-text-align-center" data-align="center">12% CAGR</td><td class="has-text-align-center" data-align="center">66,964</td><td class="has-text-align-center" data-align="center">5,580</td></tr></tbody></table><figcaption> Table: Annual/monthly investment required to make Rs. 1 crore</figcaption></figure>



As can be seen from the above table, Ajay starts investing early. Hence, he will get the maximum benefit of compounding and will have to invest only Rs. 1,724 per month to make his first one crore. On the other hand, Bhushan starts five years later than Avinash and will have to invest almost double the amount. Finally, Chetan starts investing ten years later than Avinash and will have to invest more than three times.



<figure class="wp-block-image size-full is-resized is-style-default"><img loading="lazy" src="https://images.glideinvest.com/wp-content/uploads/2021/07/Monthly-investment-required-to-make-Rs.-1-crore-with-expected-return-of-12-CAGR.png.webp" alt="Monthly SIP required to make Rs. 1 crore with expected return of 12% CAGR" class="wp-image-10464" width="602" height="369" title="Monthly investment required to make Rs. 1 crore with expected return of 12% CAGR" srcset="https://xandar.glideinvest.com/wp-content/uploads/2021/07/Monthly-investment-required-to-make-Rs.-1-crore-with-expected-return-of-12-CAGR.png.webp 602w, https://xandar.glideinvest.com/wp-content/uploads/2021/07/Monthly-investment-required-to-make-Rs.-1-crore-with-expected-return-of-12-CAGR-300x184.png.webp 300w" sizes="(max-width: 602px) 100vw, 602px" /></figure>



<figure class="wp-block-image size-full"><img loading="lazy" width="482" height="324" src="https://images.glideinvest.com/wp-content/uploads/2021/07/Chetans-journey-towards-his-first-Rs.-1-crore.png.webp" alt="Chetan’s SIP journey towards his first Rs. 1 crore" class="wp-image-10465" srcset="https://xandar.glideinvest.com/wp-content/uploads/2021/07/Chetans-journey-towards-his-first-Rs.-1-crore.png.webp 482w, https://xandar.glideinvest.com/wp-content/uploads/2021/07/Chetans-journey-towards-his-first-Rs.-1-crore-300x202.png.webp 300w" sizes="(max-width: 482px) 100vw, 482px" /></figure>



As can be seen in the above image, Chetan starts investing Rs. 66,964/year (Rs. 5,580/month). His investments grow at 12% CAGR. In 25 years (by retirement), he will reach his target of Rs. 1 crore. Similarly, Avinash and Bhushan will also reach their target of Rs. 1 crore by retirement. All the above three investors will make their first one crore only on retirement. What if you want to reach the milestone earlier?



<h2>Understanding the Power of SIPs</h2>



A systematic investment plan (SIP) is a mutual fund investment strategy. Investors might invest a small sum regularly due to this.



Investing can be done weekly, monthly, quarterly, or semi-annually, depending on the investors&#8217; comfort level. Additionally, using SIP, investors can invest any amount they want. On the other hand, an investor cannot invest less than the fund&#8217;s minimum investible amount.



As a result, investing in mutual funds through a systematic investment plan (SIP) is a wise choice. Furthermore, SIPs are effective because they help to reduce market volatility. You benefit from buying more fund units at a reduced price when the markets are down by continuing the SIP. You buy fewer units when the markets are rising. As a result, rupee cost averaging is obtained by investing in mutual funds through a systematic investment plan (SIP).



<h2 id="years-it-will-take-to-reach-one-crore">Years it will take to reach one crore!</h2>



In the above example, we calculated the monthly investment required to make your one crore based on the investment time horizon. What if the situation is the other way round? You want to start investing a certain amount, and you want to know the number of years it will take to make your one crore.



With the help of an example, let us understand how many years it will take for you to make your one crore depending on the SIP (<a href="https://www.glideinvest.com/blog/sip-calculators" target="_blank" rel="noreferrer noopener">systematic investment plan</a>) amount. We will consider different scenarios (4 different SIP amounts) with an expected return of 12% CAGR and calculate the number of years it will take to make your first one crore.



<figure class="wp-block-table is-style-stripes"><table><tbody><tr><td class="has-text-align-center" data-align="center">Monthly SIP Amount (in ₹)</td><td class="has-text-align-center" data-align="center">Annual Investment (in ₹)</td><td class="has-text-align-center" data-align="center">Expected Return</td><td class="has-text-align-center" data-align="center">Years to get rich</td></tr><tr><td class="has-text-align-center" data-align="center">5000</td><td class="has-text-align-center" data-align="center">60,000</td><td class="has-text-align-center" data-align="center">12% CAGR</td><td class="has-text-align-center" data-align="center">26</td></tr><tr><td class="has-text-align-center" data-align="center">10000</td><td class="has-text-align-center" data-align="center">120,000 </td><td class="has-text-align-center" data-align="center">12% CAGR</td><td class="has-text-align-center" data-align="center">20</td></tr><tr><td class="has-text-align-center" data-align="center">15000</td><td class="has-text-align-center" data-align="center">180,000 </td><td class="has-text-align-center" data-align="center">12% CAGR</td><td class="has-text-align-center" data-align="center">17</td></tr><tr><td class="has-text-align-center" data-align="center">20000</td><td class="has-text-align-center" data-align="center">240,000</td><td class="has-text-align-center" data-align="center"> 12% CAGR</td><td class="has-text-align-center" data-align="center">15</td></tr></tbody></table><figcaption> Table: Years it will take to reach one crore</figcaption></figure>



SIP of Rs. 5,000 with 12% expected returns would take 26 years to get to one crore—similarly, a SIP of Rs. 20,000 with 12% expected returns would take you to 1 crore in just 15 years. As can be seen from the above table, the higher the SIP amount that you start with, the sooner you will reach one crore, other things being constant.



<figure class="wp-block-image size-full"><img loading="lazy" width="602" height="380" src="https://images.glideinvest.com/wp-content/uploads/2021/07/Years-it-will-take-to-reach-Rs.-1-crore-with-expected-return-of-12-CAGR.png.webp" alt="Number of years to reach 1 Crore with a expected 12% CAGR with different monthly SIP amount" class="wp-image-10467" srcset="https://xandar.glideinvest.com/wp-content/uploads/2021/07/Years-it-will-take-to-reach-Rs.-1-crore-with-expected-return-of-12-CAGR.png.webp 602w, https://xandar.glideinvest.com/wp-content/uploads/2021/07/Years-it-will-take-to-reach-Rs.-1-crore-with-expected-return-of-12-CAGR-300x189.png.webp 300w" sizes="(max-width: 602px) 100vw, 602px" /></figure>



<h2 id="a-step-up-sip-can-help-you-make-your-first-one-crore-faster">A step-up SIP can help you make your first one crore faster!</h2>



We have seen in the above section how a higher SIP can take you to your one crore more quickly. However, it may not be possible for everyone to start with a higher amount of SIP. In such a case, you can go for a step-up SIP.



<figure class="wp-block-image size-full"><img loading="lazy" width="598" height="380" src="https://images.glideinvest.com/wp-content/uploads/2021/07/Step-up-SIP.png.webp" alt="Step-Up SIP can help you reach Rs. 10000000 goal faster " class="wp-image-10468" srcset="https://xandar.glideinvest.com/wp-content/uploads/2021/07/Step-up-SIP.png.webp 598w, https://xandar.glideinvest.com/wp-content/uploads/2021/07/Step-up-SIP-300x191.png.webp 300w" sizes="(max-width: 598px) 100vw, 598px" /></figure>



A step-up SIP allows you to increase your SIP investment amount by a specified amount at specified intervals. For example, Karan has started a monthly SIP of Rs. 5,000. He has chosen the step-up SIP option to increase his SIP amount by Rs. 1000 every year. In this case, Karan’s bank account will be debited by Rs. 5,000 every month in the first year, Rs. 6,000 every month in the second year, Rs. 7,000 every month in the third year, and so on.



A step-up SIP will help you reach your <a href="https://www.glideinvest.com/blog/how-to-plan-your-investments-to-meet-financial-goals/" target="_blank" rel="noreferrer noopener">financial goal</a> of Rs. 1 crore faster than a regular SIP.



<h2 id="make-a-proper-goal-plan-to-reach-your-first-one-crore">Make a proper goal plan to reach your first one crore</h2>



On your journey to make your first one crore, you can partner with the Glide Invest App. You can set a goal for making one crore with the following steps:



<ol type="a"><li>Create a new goal and give it a title</li><li>Enter the amount as Rs. 1 crore</li><li>Enter the number of years in which you wish to accumulate the money</li><li>Select the annual increment in step-up SIP (10%, 15%, or 25%)</li><li>Based on your risk profile, the platform will recommend you the SIP amount and the asset allocation</li></ol>



Before you get started, you need to know about the three critical steps of risk profiling, asset allocation, and investing:



<ol type="a"><li>Risk profiling: Based on a few Yes/No questions, you will be classified as an aggressive, balanced, or conservative investor.</li><li>Asset allocation: According to your risk profile, the platform will recommend you an asset allocation consisting of equity mutual fund, debt mutual fund, international equity mutual fund, and <a href="https://www.glideinvest.com/blog/a-simple-guide-to-gold-investment" target="_blank" rel="noreferrer noopener">gold mutual fund</a> in varying proportions.</li><li>Start investing: You can go with the recommended asset allocation based on your risk profile and start investing. You can also choose from alternate suggestions based on a different risk profile and start investing. However, you should regularly review the goal plan and make the required changes, from time to time, till you reach the target of Rs. 1 crore.</li></ol>



<h2>The Takeaway</h2>



One might expect to see a boost in one&#8217;s salary as one gets older. The amount of money saved in the early years may be little, but as one progresses up the corporate ladder, so does the amount of money saved. Also, with inflation present, the savings in a Step-Up SIP are inflation-adjusted, compensating for the currency&#8217;s declining purchasing value. In such cases, Step-Up SIP comes in handy.&nbsp;



One can start a SIP with an amount that is comfortable for them or that meets their needs, but choosing Step-Up SIP will help them attain their goals more quickly and without the risk of under-investing.



<h2 id="start-your-crorepati-journey-today-with-the-glide-invest-app">Start your crorepati journey today with the Glide Invest App</h2>



To make your first one-crore financial goal, start your SIPs with the Glide Invest App. Within the Glide Invest App, you can choose from various financial goals or define your own financial goals and create a SIP to achieve them. With Glide Invest, you can plan and systematically invest towards your financial goals. You will get guidance for: A personalised risk profile assessment.



<ol><li>Identifying your financial goals</li><li>Appropriate <a href="https://www.glideinvest.com/blog/how-important-is-asset-allocation/" target="_blank" rel="noreferrer noopener">asset allocation</a></li><li>Making a financial plan for each goal</li><li>Automating the financial plan</li><li>Review and analysis of your financial plan </li><li>Hand holding you till your financial goals are achieved.</li></ol>



To start investing towards your financial goals, download the Glide Invest App now from <a href="https://play.google.com/store/apps/details?id=com.glideinvest.advisory">Google Play Store</a> or <a href="https://apps.apple.com/in/app/glide-invest/id1533054230?ign-mpt=uo%3D2">Apple App Store</a> and get started.



<h2>FAQs</h2>



Q1: What is the SIP step-up period?



A1: Top-up SIP is another name for step-up SIP. Every year, you essentially top up your SIP by a percentage — for example, 5000 in 2015, 5000+15 per cent in 2016, and so on. You can accomplish this based on your current income, projected annual increments, and, of course, financial objectives.



Q2: Can SIP be considered Risk Free?



A2: SIP does not totally remove risk. Your mutual fund investments are expected to suffer in a sinking market. However, when compared to lump-sum investments, SIP investments will lower your losses. Similarly, SIPs do not guarantee long-term profits.



Q3: Is it possible to become rich with SIP?



A3: f you invest Rs 10,000 per month in an equity fund under a systematic investment plan (SIP) for 30 years, you will have amassed a corpus of Rs 3.53 crore. Compounding enhances your wealth and makes you wealthy.



Q4: How can I make a one-crore with SIP investment?



A4: The 15*15*15 method is the simplest approach to acquire Rs 1 crore with mutual funds. It claims that if a person invests Rs 15,000 per month for 15 years in a fund with a 15% return, they will amass Rs 1 crore.