Know how: Invest Rs 100 a day in mutual funds to create Rs 1 crore

For many investors, the idea of turning a small daily investment into a substantial corpus like Rs 1 crore may seem far-fetched. However, with the power of compounding and disciplined investment through mutual funds, it is entirely possible.

By investing just Rs 100 a day, which adds up to Rs 3,000 a month, you can set yourself on a path to significant wealth creation.

In this article, we will explore how investing Rs 100 a day can lead to Rs 1 crore over time and how you can use tools to calculate MF returns and calculate SIP returns to track your financial progress.

Why choose mutual funds for wealth creation?

Mutual funds offer a diversified and professionally managed way to invest in various asset classes such as equities, bonds, and money markets. By investing regularly in mutual funds through a Systematic Investment Plan (SIP), you can gradually build wealth over time. The advantage of SIPs is that they allow you to invest small amounts consistently, without needing to commit a large sum upfront.

When you start a SIP, you benefit from rupee cost averaging, which helps reduce the impact of market volatility. Additionally, the power of compounding means that your returns generate further returns over time, helping your investment grow exponentially. To understand how your investments can grow, it is crucial to regularly calculate MF returns and calculate SIP returns to ensure you stay on track to meet your financial goals.

How does Rs 100 a day turn into Rs 1 crore?

Let us break down how a Rs 100-a-day investment can accumulate to Rs 1 crore over time. Investing Rs 100 a day equates to Rs 3,000 a month. Assuming an annual return of 12%, which is a reasonable expectation for equity mutual funds over the long term, your investments can grow significantly due to the compounding effect.

To calculate SIP returns, you can use financial tools and calculators designed to estimate the future value of your investments based on monthly contributions, expected return rates, and the investment duration. By investing Rs 3,000 per month for 25 years, and assuming a 12% annual return, you could potentially accumulate close to Rs 1 crore.

Step-by-step guide to calculate MF returns and SIP returns

1. Determine your monthly contribution: In this case, the contribution is Rs 3,000 per month, equivalent to Rs 100 a day.

2. Choose your investment duration: Let us assume you are planning to invest for 25 years to maximise the power of compounding.

3. Expected annual return: Historically, equity mutual funds have offered annual returns of around 10–12%. For this example, we will assume a return rate of 12%.

4. Use a financial calculator: You can easily calculate MF returns and calculate SIP returns using online calculators by inputting these values. The results will show how your small daily investments can grow into a significant amount over time.

Example: How Rs 100 a day grows over time

To better understand how much your investment can grow, let us break down the journey:

●      Year 5: By investing Rs 3,000 per month for 5 years, your total investment will be Rs 1.8 lakh. Assuming a 12% annual return, your corpus could grow to approximately Rs 2.35 lakh.

●      Year 10: After 10 years, your total investment will be Rs 3.6 lakh. At this point, with compounding, your corpus could reach around Rs 6.7 lakh.

●      Year 20: By the 20th year, your total contributions will amount to Rs 7.2 lakh. Thanks to compounding, your investment could now grow to approximately Rs 38 lakh.

●      Year 25: After 25 years, you would have invested Rs 9 lakh in total. With a 12% annual return, your investment could have grown to nearly Rs 1 crore.

By using tools to calculate MF returns and calculate SIP returns, you can track your progress and make any necessary adjustments to your investment strategy to stay on track towards your Rs 1 crore goal.

Why consistency matters

Consistency is key when it comes to wealth creation. SIPs work best when you invest regularly and stay committed to your investment plan, even during periods of market volatility. The power of compounding accelerates as you remain invested over the long term. The longer your money stays invested, the more your returns compound, and this is why it is essential to remain disciplined and keep investing.

Regularly reviewing your portfolio and using tools to calculate MF returns and calculate SIP returns can help ensure that your investments are performing as expected. This also allows you to make any necessary changes to your investment strategy to align with your evolving financial goals.

Choosing the right mutual funds

While the goal is to grow your Rs 100-a-day investment into Rs 1 crore, it is crucial to choose the right mutual funds that align with your risk tolerance and financial goals. Equity mutual funds, for instance, offer higher returns over the long term, but they come with higher volatility. Debt funds, on the other hand, are more stable but provide lower returns.

To ensure you are on the right path, regularly calculate MF returns for the mutual funds in your portfolio and compare them to other available schemes. If your current fund is underperforming, you may want to switch to a more consistent performer.

How to use SIP to achieve long-term financial goals

SIPs are an ideal tool for long-term wealth creation because they make investing accessible and straightforward. By contributing small amounts regularly, you reduce the pressure of market timing and benefit from rupee cost averaging. Over time, your investments grow due to compounding, and you can easily calculate SIP returns to track how well your portfolio is performing.

If you are aiming to accumulate Rs 1 crore by the time you retire or reach another financial milestone, starting an SIP early and staying consistent can help you achieve your goal. Always use tools to calculate MF returns and calculate SIP returns regularly so that you stay on track and make informed decisions based on the performance of your investments.

Conclusion

Investing Rs 100 a day in mutual funds is a simple yet effective strategy to accumulate Rs 1 crore over time. By using tools to calculate MF returns and calculate SIP returns, you can track your investment progress and ensure that your portfolio grows steadily towards your goal.

The key to success lies in consistency, patience, and choosing the right mutual funds that align with your financial objectives. With the power of compounding and disciplined SIP investments, turning a modest daily contribution into Rs 1 crore is within your reach.

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