How much should I invest in monthly SIP to build a corpus amount of Rs 5 crores?

Investors invest in SIP to earn profits by contributing fixed amounts at regular intervals. In order to build a certain corpus from the SIP, the investor needs to establish the monthly amount which must be invested in the SIP. Even though uncertainties can impact this corpus amount, an investor can calculate an estimate which could help strategize future actions.

invest in SIP to earn profits

One of the most popular investment options in India is mutual funds. Over 14.11 crore accounts in India are utilized to invest in mutual funds. The returns on mutual fund investments, like all types of financial products, matter most to investors. Given the market's volatility, forecasting mutual fund returns can be challenging. Therefore, before investing in mutual funds investors may decide the corpus amounts that they seek to build. They will have to strategize and invest in monthly SIP, depending on their goals. Let us understand how to calculate the monthly SIP amount based on the corpus amount the investor seeks to build.

How to calculate the monthly SIP amount based on the corpus amount?

To calculate the monthly SIP amount, an investor can utilize the formula used for calculating the Corpus amount. The corpus amount the investors have decided can be entered into the formula along with the period in which they seek to create the corpus and assume a rate of return on their investments. The formula which can be used to calculate the monthly SIP amount is:

MI (Monthly Investment) = CA(Corpus Amount)/{(1+ROR (Rate of Return))^(IM-1)*((1+ROR)/ROR))}

  • The Corpus amount would be the total expected amount obtained after investing for a certain period of years.
  • The monthly investment would be the amount of money invested in the mutual funds each month.
  • The ROR (Rate of Return) is the percentage of return which could be expected from the investment.
  • The investment months are the number of months for which the investments have been made.

To understand how to calculate the monthly SIP amount, let us consider the example of an individual who seeks to build a corpus amount of Rs 5 crores.

Depending upon the years in which the investor seeks to build the corpus, the monthly SIP investment can vary. Assuming that the rate of return for the investments is 12 per cent, the monthly investments depending upon the years, would be:

monthly SIP investment

The investors must understand that this estimate is based upon the assumption that the investments have an average rate of return of 12 per cent. This rate of return may change with time due to factors such as the fund's performance, market volatility and inflation. The investor may also choose to invest in multiple mutual funds, which can influence the rate of return on the total investment.

Estimating the amount of money to be invested each month can help investors understand the possibility of fulfilling their goals. Even though the corpus amount after the period may be slightly different, calculating an estimation at regular intervals is beneficial.

Also watch: How to earn crores from SIP investment?

Final Words

Mutual funds involve a risk the investor must accept before deciding to invest. The investors must reevaluate their strategy per market conditions, fund performance, and goals at regular intervals. Estimating the corpus amount using the above formula can provide the investor with an average of returns which can be expected. Still, multiple factors can lead to the increase or decrease of the corpus amount.


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