Investing in mutual funds is a great way to build wealth. The earlier you start the better it is. Some ways in which you can achieve a target of ₹1 crore at for different investment horizon is shown in this article.

As you must already be aware, different mutual funds offer different returns.

The ones that give a higher rate of return are usually riskier and are better invested in for longer durations of time.

How Much You Should Invest via SIP to Reach ₹1 Crore

Market movements cannot be predicted with certainty.

However, historically mutual funds have generated double-digit returns creating significant wealth for the investors over the long-term.

Here is the amount you need to invest in the monthly SIP to get a target amount of ₹1 Cr.

Funds selected for calculation are the best funds suitable depending on your investment tenure.

More: Use SIP Calculator to Estimate Returns

For 1 Year of Investment Tenure

For a 1 year period, investing in debt fund is the best option.

Here is one of the best debt fund of 2018 you can select for a 1-year tenure and the monthly SIP you need to pay:

Axis Liquid Fund (click to invest)

Fund Type Debt – Liquid
Target amount ₹1,00,00,000
Investment Period 1 year
Return per annum (since 1 yr) 6.85%
Monthly SIP amount ₹8,08,261

L&T Short Term Income Fund (click to invest)

Fund Type Debt – Short Term
Target amount ₹1,00,00,000
Investment Period 1 year
Return per annum (since 1 yr) 7.39%
Monthly SIP amount ₹8,06,372

Franklin India Low Duration Fund (click to invest)

Fund Type Debt – Ultra Short Term
Target amount ₹1,00,00,000
Investment Period 1 year
Return per annum (since 1 yr) 7.97%
Monthly SIP amount ₹8,04,358

Hence, to get to ₹1 crore in 1 years, you need to invest around ₹8 lakhs per month, assuming an annual return of 6.5-8% per year.

Read More: 13 Things You Need to Know About SIP

But it advisable to increase your investment tenure.

As you give more time to your investment, the true magic of compounding comes into play.

For 3 Years of Investment Tenure

For a 3 year tenure, investing in balanced funds is the best option.

These are diversified mutual funds that balance between risk and returns on investment and are some of the most popular mutual funds these days.

Here is one of the best balanced funds of 2018 you can select for a 3-year tenure and the monthly SIP you need to pay:

Tata Retirement Savings Fund – Moderate Plan (click to invest)

Fund Type Hybrid – Equity Oriented
Target amount ₹1,00,00,000
Investment Period 3 years
Return per annum (since 3 yr) 13.43%
Monthly SIP amount ₹2,29,776

Aditya Birla Sun Life Balanced 95 (click to invest)

Fund Type Hybrid – Equity Oriented
Target amount ₹1,00,00,000
Investment Period 3 years
Return per annum (since 3 yr) 12.10%
Monthly SIP amount ₹2,34,010

Reliance Regular Savings Fund – Balanced (click to invest)

Fund Type Hybrid – Equity Oriented
Target amount ₹1,00,00,000
Investment Period 3 years
Return per annum (since 3 yr) 13.19%
Monthly SIP amount ₹2,30,533

Hence, to get to ₹1 crore in 3 years, you need to invest around ₹2.3 lakhs per month, assuming an annual return of 11.5-13.5% per year.

But it advisable to increase your investment tenure.

As you give more time to your money, the true magic of compounding comes into play.

More: Mutual Funds Minimum Investment Rs 100

For 5 Years of Investment Tenure

For a 5 year tenure, investing in large-cap funds is the best option.

Large-cap companies are big, well-established companies of the equity market. These companies are strong, reputable, and have a track record of strong performance.

Large-cap companies generally are top 100 companies in a market.

Here is one of the best large-cap funds of 2018 you can select for a 5-year tenure and the monthly SIP you need to pay:

SBI Bluechip Fund (click to invest)

Fund Type Equity – Large Cap
Target amount ₹1,00,00,000
Investment Period 5 years
Return per annum (since 5 yr) 19.85%
Monthly SIP amount ₹1,03,229

Mirae Asset India Opportunities Fund (click to invest)

Fund Type Equity – Large Cap
Target amount ₹1,00,00,000
Investment Period 5 years
Return per annum (since 5 yr) 22.16%
Monthly SIP amount ₹97,764

Reliance Top 200 Fund (click to invest)

Fund Type Equity – Large Cap
Target amount ₹1,00,00,000
Investment Period 5 years
Return per annum (since 5 yr) 19.25%
Monthly SIP amount ₹1,04,703

Hence, to get to ₹1 crore in 5 years, you need to invest around ₹1 lakh per month, assuming an annual return of 19-22% per year.

For 10 Years of Investment Tenure

For a 10 year tenure, investing in multi-cap funds is the best option.

These funds are used to minimize the risk and diversify the investment.

In these funds, capital is invested in companies across different sectors and of different capitalization.

Here is one of the best multi-cap funds of 2018 you can select for 10 years and the monthly SIP you need to pay:

Aditya Birla Sun Life Advantage Fund (click to invest)

Fund Type Equity – Multi-Cap
Target amount ₹1,00,00,000
Investment Period 10 years
Return per annum (since launch) 18.48%
Monthly SIP amount ₹31,976

DSP BlackRock Opportunities Fund (click to invest)

Fund Type Equity – Multi Cap
Target amount ₹1,00,00,000
Investment Period 10 years
Return per annum (since launch) 18.91%
Monthly SIP amount ₹31,252

Kotak Select Focus Fund (click to invest)

Fund Type Equity – Multi Cap
Target amount ₹1,00,00,000
Investment Period 10 years
Return per annum (since launch) 18.53%
Monthly SIP amount ₹31,812

Hence, to get to ₹1 crore in 10 years, you need to invest around ₹31,000 per month, assuming an annual return of 18-19% per year.

For 15 Years of Investment Tenure

For a 15 year tenure, investing in mid-cap funds is the best option.

Mid-caps are compact companies of the equity market, falling somewhere between small and large cap companies and are 100-250 companies on the market capitalization charts.

Here is one of the best mid-cap funds of 2018 you can select for a 15-year tenure:

L&T Midcap Fund (click to invest)

Fund Type Equity – Mid Cap
Target amount ₹1,00,00,000
Investment Period 15 years
Return per annum (since launch) 21.75%
Monthly SIP amount ₹9,113

Mirae Asset Emerging Bluechip Fund (click to invest)

Fund Type Equity – Mid Cap
Target amount ₹1,00,00,000
Investment Period 15 years
Return per annum (since launch) 23.40%
Monthly SIP amount  ₹7,881

Hence, to get to ₹1 crore in 15 years, you need to invest around  ₹8,000 –  ₹9000 per month, assuming an annual return of 22-24% per year.

For 20 Years of Investment Tenure

For 20 years tenure, investing in small-cap funds is the best option.

Small-cap stands for small companies of the stock market and are all the companies apart from large and mid-cap companies in a market.

Small cap funds give high returns, but the risk associated with these funds is very high, which can be minimized by increasing investment horizon.

Here is one of the best small-cap funds of 2018 you can select for 20 years.

L&T Emerging Businesses Fund (click to invest)

Fund Type Equity – Small Cap
Target amount ₹1,00,00,000
Investment Period 20 years
Return per annum (since launch) 30.98%
Monthly SIP amount  ₹1,035

Reliance Small Cap Fund (click to invest)

Fund Type Equity – Small Cap
Target amount ₹1,00,00,000
Investment Period 20 years
Return per annum (since launch) 32.30%
Monthly SIP amount ₹878

Hence, to get to ₹1 crore in 20 years, you need to invest around ₹1000 per month, assuming an annual return of 31-33% per year.

**The expected returns taken above are as on 23rd April 2018 for calculating the monthly SIP amount. It is based on these fund’s past performance. The returns in mutual funds vary with time. The above returns are no guarantee of the fund’s future performance.

Things to Remember

The rates of return consider above are all past data.

No one can predict the actual rate of return you will get on your investment.

You can only assume and predict the fund’s capability based on its past performance.

But don’t just run for returns from investment for investing in mutual funds. There are a lot of factors you should look into before selecting a fund which will match your investment goals.

Following the 3 things you should always remember before investing in Mutual Funds :

  1. Don’t blindly invest in the fund with the highest returns. Invest based on the duration you want to invest for.
  2. Every person’s financial condition is different. Evaluate the funds you invest in yourself – don’t invest in a fund because of its popularity.
  3. Review your investment from time to time but not too often. Once a few weeks is good enough.

Read More: 10 Tips on Investing in Mutual Funds

To ensure that the fund is in good hands, choose a fund house having a fund manager with a good amount of experience managing small/mid cap funds and associated with these funds for a good number of years.

To look at some of the best performing funds from every category of mutual funds, check out Groww 30 best mutual funds to invest in 2018.

Happy Investing!

Disclaimer: the views expressed here are of the author and do not reflect those of Groww.