SIP Investment Explained: How Much to Invest Monthly for ₹1 Crore
Ever wondered how much you really need to invest every month to become a crorepati? The answer is hiding in one critical number: inflation.
Try our SIP with Inflation Calculator →
Table of Contents
What Is a SIP (Systematic Investment Plan)?
A Systematic Investment Plan (SIP) is the simplest way to invest in mutual funds. Instead of investing a large lump sum at once, you invest a fixed amount of money at regular intervals (usually monthly).
Think of it as an EMI you pay for your future wealth. It's powerful for two reasons:
It builds discipline. Since the amount is auto-debited, you invest consistently without having to think about it.
It uses Rupee Cost Averaging. You automatically buy more units when the market is low and fewer units when the market is high. This averages out your cost and reduces the risk of timing the market.
SIP vs. Lump Sum: A Quick Comparison
| Feature | SIP (Systematic Plan) | Lump Sum (One-Time) |
|---|---|---|
| Investment | Small, fixed amounts monthly. | Large, single amount at once. |
| Risk | Lower (due to cost averaging). | Higher (risk of bad timing). |
| Best For | Salaried investors, long-term goals. | Windfalls, experienced investors. |
How Are SIP Returns Calculated?
SIP returns are calculated using the magic of compounding. This means you don't just earn returns on your investment; you earn returns on your returns.
For example:
Year 1: You invest ₹10,000. It earns 12% (₹1,200). Your total is now ₹11,200.
Year 2: You invest another ₹10,000. But now, your ₹11,200 also earns 12%. Your previous earnings are now working for you!
The Magic of Compounding: Your Money's Snowball
Compounding is the single most powerful force in finance. Albert Einstein supposedly called it the "eighth wonder of the world."
How the Snowball Grows
Imagine two investors, Ravi and Priya, both investing ₹10,000 a month at 12% returns.
- Ravi invests for 10 years (from age 25 to 35) and then stops, investing a total of ₹12 Lakhs. He never invests again.
- Priya waits 10 years and invests for 20 years (from age 35 to 55), investing a total of ₹24 Lakhs.
Who Has More at Age 55?
Ravi, who started early and invested less, has ₹2.1 Crores. His money had 30 years to compound.
Priya, who started late and invested more, has only ₹9.9 Crores. (Wait, that's not right, let me fix the logic).
Let's Try a Better Example: The First 10 Years vs. The Last 10 Years
Imagine you invest ₹10,000/month for 30 years.
- In the first 10 years: You invest ₹12 Lakhs. At 12% returns, your corpus grows to about ₹23 Lakhs.
- In the last 10 years (from year 20 to 30): You invest another ₹12 Lakhs. Your corpus grows from ₹99 Lakhs to ₹3.5 Crores.
You made ₹2.5 Crores in the last 10 years, compared to just ₹23 Lakhs in the first 10. That's compounding. Your money, not just your contributions, is doing the heavy lifting. The longer you stay, the harder it works.
What is Rupee Cost Averaging? (Why Market Crashes Help SIPs)
This is the "automatic smarts" built into every SIP. It removes the stress of trying to "time the market" (which even experts can't do).
How It Works: A Simple Example
You invest a fixed ₹1,000 every month.
| Month | Market | Fund Price (NAV) | Units Bought (₹1000) |
|---|---|---|---|
| Jan | Normal | ₹100 | 10 Units |
| Feb | Crashes! | ₹50 | 20 Units (You buy more!) |
| Mar | Recovers | ₹100 | 10 Units |
The Result
You invested a total of ₹3,000 and own 40 units.
Your Average Cost per unit isn't ₹100. It's ₹3,000 / 40 units = ₹75 per unit.
When the market returns to ₹100, your ₹75 units are already at a profit. You turned the market crash into an advantage without doing anything.
The "₹1 Crore" Goal: What You Actually Need
This is where most people make a critical mistake. They plan to have ₹1 Crore in 20 years, not realizing what that money will actually be worth.
The Shocking Truth About Inflation
Inflation is the silent killer of wealth. It's the rate at which your money loses its purchasing power.
At just 6% inflation, ₹1 Crore in 20 years will have the same purchasing power as only ₹31 Lakhs does today.
This means if your goal is to have the purchasing power of ₹1 Crore, you actually need to save around ₹3.2 Crores!
Find Your Real Wealth Goal →Real Wealth vs. Paper Wealth: The "Real Rate" Explained
The single most important concept in long-term investing is the Real Rate of Return. It answers the question: After factoring in rising prices, how much did my money actually grow?
The Simple Analogy: A Cart of Groceries
Imagine you start the year with ₹10,000, which buys you one cart full of groceries.
- Your investment "nominally" grows. You now have ₹11,200. On paper, you made a profit!
- But inflation also grew. That same cart of groceries now costs ₹10,600.
Your Real Rate of Return is this small, "real" profit, not the larger "nominal" profit.
Why is this critical? If your investment returns simply match inflation, your Real Rate of Return is 0%. You are merely keeping pace with rising costs. You are not getting wealthier. To truly grow your purchasing power and secure your future, you must choose investments, like long-term equity SIPs, that are capable of generating a consistent and positive real return. Our calculator helps you instantly see if your plan meets this essential benchmark.
The Two Plans to Reach ₹1 Crore (in 20 Years)
Let's compare two investors, both aiming for ₹1 Crore in 20 years with a 12% expected return.
Scenario 1: The Nominal Goal (The Mistake)
Ravi plans to have a final value of ₹1 Crore. He ignores inflation.
- Monthly SIP:₹10,000
- Total Invested:₹24 Lakhs
- Final Value:₹1 Crore
- Real Value (at 6% inflation):₹31 Lakhs
Result: Ravi reaches his goal on paper, but can only buy 1/3 of what he planned for.
Scenario 2: The Real Goal (The Smart Plan)
Priya plans to have a real value of ₹1 Crore (in today's money).
- Monthly SIP:₹32,200
- Total Invested:₹77 Lakhs
- Final Value:₹3.21 Crores
- Real Value (at 6% inflation):₹1 Crore
Result: Priya's final corpus is 3.2x larger, but she achieves her real financial goal.
Step-Up SIP: The Secret Weapon Against Inflation
A Step-Up SIP means you increase your monthly investment by a small amount each year (e.g., 10%), usually matching your salary hike. This is the single best way to reach your "Real Goal" without feeling the pinch.
Let's revisit Priya's "Real Goal" of ₹1 Crore (today's value).
Priya's Smart Step-Up Plan
She decides to start smaller and step-up her SIP by 10% each year.
- Starting Monthly SIP:₹13,500 (vs. ₹32,200)
- Total Invested:₹76.5 Lakhs
- Final Value (at 12%):₹3.22 Crores
- Real Value (at 6% inflation):₹1 Crore
Result: By using a Step-Up, she achieves the exact same goal by starting with an investment that is 58% smaller!
The Psychology of Wealth: Consistency Beats Emotion
The biggest secret to SIPs isn't the math. It's the psychology. Investing is emotional, and humans are hardwired to make bad decisions at the worst times.
The Cycle of Fear and Greed
When markets are high (Greed): New investors jump in, hoping to get rich quick. They buy at the peak.
When markets are low (Fear): Investors panic and sell their investments to "stop the losses." They sell at the bottom.
This is the exact opposite of what you should do.
How SIPs Fix This
A SIP automates your decision-making. It forces you to be consistent.
- It makes you buy when everyone else is fearful (because it's automatic).
- It prevents you from dumping all your money at the peak when everyone is greedy.
The person who invests consistently will almost always beat the person who tries to be clever.
What's a 'Realistic' Return Rate to Expect?
The 12% we've used is a common long-term average for equity mutual funds. But your expected return depends entirely on your investment type.
Equity Funds (High Risk)
Invest in stocks (e.g., Index Funds, Large-cap, Flexi-cap). Best for goals 7+ years away.
Long-term Average: 12% - 15%
Hybrid Funds (Medium Risk)
A mix of stocks and bonds. A good balance for goals 3-5 years away.
Long-term Average: 9% - 11%
Debt Funds (Low Risk)
Invest in bonds and fixed-income. Best for short-term goals (1-3 years).
Long-term Average: 6% - 7% (Often just beats inflation)
How to Start a SIP (in 3 Simple Steps)
Starting your investment journey is easier than ever. You can start online in minutes.
Complete Your KYC
You'll need your PAN card, Aadhaar card (linked to your mobile), and bank details to complete your one-time Know Your Customer (KYC) process.
Choose Your Fund(s)
Based on your goals and risk appetite, select a mutual fund. For beginners, a simple Nifty 50 Index Fund is often a great place to start.
Set Up the SIP
Choose your monthly amount, select a date for the auto-debit, and approve the bank mandate. That's it! Your investment is now on autopilot.
Ready to Start Investing?
You can open a free Demat account online in minutes with a trusted platform.
Open a Free Account with 5paisa →A Beginner's Guide to Choosing Your First Fund
Choosing a fund seems hard, but you only need to know 3 simple things. For your first SIP, the goal is simplicity and low costs.
1. Always Choose a "Direct" Plan
You will always see two versions of a fund: "Direct" and "Regular". Always pick "Direct". "Regular" plans pay a hidden commission to a broker, which comes directly out of your returns. Direct plans have no commission, so your returns are higher.
2. Check the "Expense Ratio"
This is a small annual fee the fund charges, shown as a percentage (e.g., 0.5%). Lower is always better. For a Direct Index Fund, look for an expense ratio under 0.2%.
3. For Beginners: Start with an Index Fund
Don't know which fund to pick? Start with a simple Nifty 50 Index Fund (Direct Plan). This fund doesn't try to beat the market; it is the market. It just buys the top 50 companies in India. It's low-cost, simple, and has historically delivered that 12-14% long-term return.
Common SIP Mistakes to Avoid
Even the best SIP plan can fail if you fall into these common traps.
Stopping SIPs During Dips
This is the worst mistake! Market dips are when your SIP is buying more units for the same price. Stopping it is like pausing your EMI. Consistency is what builds wealth.
Ignoring Inflation
As we've seen, this leads to massively under-funding your real goals.
Not Using Step-Up
Your income grows, so should your investments. A 10% annual step-up can drastically boost your final corpus.
Investing Without a Goal
Always link each SIP to a specific financial target (e.g., "Retirement," "Child's Education"). This gives you the motivation to stay invested.
💡 Avoiding these mistakes can be the difference between ₹80 lakh and ₹1 crore in 20 years!
Planning for a Goal: How to Use This Calculator
A SIP is a vehicle. Your goal is the destination. Here is how you use this calculator to connect the two, which is the core of Goal-Based Investing.
Identify Your Goal's Current Cost
First, find the cost of your goal in today's money. Example: A college degree costs ₹20 Lakhs today.
Find the Future (Inflated) Cost
This is the most important step. You need to find what that ₹20 Lakh degree will cost in the future. You can use our calculator for this!
- Set "Monthly SIP Amount" to ₹20,00,000 (your goal's current cost).
- Set "Annual Step-Up" to 0%.
- Set "Expected Annual Return" to 6% (your inflation rate).
- Set "Investment Period" to how many years away your goal is (e.g., 15 years).
Find the Monthly SIP
Now, clear the calculator and work backwards.
- Set your real "Expected Annual Return" (e.g., 12%) and "Period" (15 years).
- Adjust the "Monthly SIP Amount" (and "Step-Up"!) until the "Future Value" matches your ₹48 Lakh target.
That's it! You have now calculated the exact SIP needed to fund the future, inflated cost of your goal.
SIP Returns Comparison: Inflation vs. No Inflation
This table shows the powerful (and dangerous) effect of inflation over time. Notice how the gap between Final Value and Real Value gets wider over longer periods.
| Monthly SIP | Duration | Return (12%) | Inflation (6%) | Final Value | Real Value |
|---|---|---|---|---|---|
| ₹5,000 | 10 years | 12% | 6% | ₹11.6 Lakh | ₹6.5 Lakh |
| ₹10,000 | 15 years | 12% | 6% | ₹50.4 Lakh | ₹21.0 Lakh |
| ₹15,000 | 20 years | 12% | 6% | ₹1.5 Crore | ₹46.7 Lakh |
| ₹20,000 | 25 years | 12% | 6% | ₹3.79 Crore | ₹88.4 Lakh |
Frequently Asked Questions
To get a nominal value of ₹1 crore in 20 years (at 12% return), you need to invest approx. ₹10,000/month.
However, to get the real value (purchasing power) of ₹1 crore, you'd need a final corpus of ₹3.2 Crores, which requires a SIP of ₹32,200/month or a step-up SIP starting at ₹13,500.
The best SIP calculator is one like ours that includes inflation and step-up options. A simple calculator only shows your nominal return, which is misleading. A calculator with inflation shows the "Real Value" of your money, which is essential for accurate goal planning.
Yes. Inflation doesn't change your fund's return (e.g., 12%), but it erodes the purchasing power of that return. If your SIP earns 12% and inflation is 6%, your Real Return (your actual growth in wealth) is only about 6%.
For most investors, yes. SIPs build discipline, are lighter on the pocket, and use Rupee Cost Averaging to reduce risk. A lump sum requires a large amount of cash and the stress of "timing the market," which is very difficult to do correctly.
Use the "Step-Up" feature (also called an "annual increase") on your mutual fund platform. You can set it to automatically increase your SIP by a percentage (like 10%) or a fixed amount (like ₹1,000) each year. It's the best way to align your investments with your salary growth.
Conclusion: Your Next Step
Planning for ₹1 Crore is a great goal, but planning for its real value is the only way to guarantee your financial security.
Don't just guess. Before you start your next SIP, check the real value of your future money.