The Systematic Way To Create Your First 1CR Investment Portfolio

Discipline is crucial when you are building a successful investment portfolio. Systematic investment plans or mutual funds SIP as they are popularly known are a great investment choice for young investors to create significant wealth over the long run. Systematic investment plans or SIPs allow you to invest fixed amounts into a mutual fund at predetermined intervals. Investing in equity-oriented mutual funds via the SIP route can be an excellent strategy to build a corpus for long-term financial goals.

This article helps you understand how SIP investment strategy can help you create your first 1Cr investment portfolio.

Why should you invest in SIP?

Participating in the equity market is the key to optimising your savings and building wealth over the long term. The systematic investment plan is a great financial planning tool offered by asset management companies that allow you to participate in the equity market by allowing you to invest even a small amount for a certain specified period at a regular interval. Not just equity, mutual fund SIPs also allow you to invest in a mix of various asset classes like bonds, money market instruments, gold and real estate, etc.

Investing in systematic investment plans right from the start of your career/earning years is a wise decision for any young investor.

Here are some important reasons for you to start investing in SIP:

1. Starting early as a SIP investor allows you to take advantage of the power of compounding (compounding returns) over time, potentially maximising your wealth accumulation. The power of compounding works best when you give your investments time to grow.
2. Investing systematically every month a fixed amount out of your income instils a savings habit and provides the opportunity to grow your investment steadily and navigate market fluctuations effectively.
3. As you invest in SIP at regular intervals over a certain period, it gives you the benefit of rupee-cost averaging and allows you to benefit from market volatility by reducing the impact of short-term market fluctuations on your overall investment portfolio.
4. Even with a small amount of savings (INR 1,000 and above), SIP allows you to invest in various market securities like stocks, bonds, gold, etc. and gives you the benefit of diversification.
5. SIP offers you many benefits like professional management of your money, liquidity, flexibility, convenience to invest online, etc.

Before you invest in SIP, you can calculate the estimated fund value using the SIP calculator app. You can compare the plethora of fund options available online and choose the best suitable one for you to invest as per your financial goals, risk appetite, and time frame.

How to create a 1 Cr investment portfolio by investing in SIP?

You can create a SIP investment strategy to build your investment portfolio and reach your target amount/goal by implementing that. With the help of the SIP calculator app, you can find out how much amount you need to invest in SIP to reach your desired goal of building a 1Cr portfolio within a minute.

The SIP calculator app works on the below formula:

FV = P [{(1+i)n -1}/i] X [1+i]

In this formula,

FV - The estimated future value of your SIP investment

P - the amount that you invest regularly in SIP

n - investment period (number of instalments)

i - the expected rate of return

Let us look at a few different scenarios and understand how you can build a 1Cr investment portfolio by investing in a systematic investment plan (equity-oriented mutual fund).

Scenario 1: Create a 1 Cr investment portfolio by investing INR 10,000 monthly in a SIP investment.

You can create a 1Cr investment portfolio, if you invest INR 10,000 monthly in a SIP investment that can give you a return at an expected rate of 12% (CAGR) for the next 20 years. That means you need to invest a total of INR 24 lakhs over the next 20 years to reach the goal amount of INR 1 Cr.

Scenario 2: Create a 1 Cr investment portfolio by investing INR 20,000 monthly in a SIP investment.

You can create a 1Cr (1.01 Cr) investment portfolio if you invest INR 20,000 monthly in a SIP investment that can give you a return at an expected rate of 12% (CAGR) for the next 15 years. That means you need to invest a total of INR 36 lakhs over the next 15 years to reach the goal amount of INR 1 Cr.

Scenario 3: Create a 1Cr investment portfolio quickly by investing INR 43,000 monthly in a SIP investment.

You can create a 1Cr investment portfolio if you invest INR 43,000 monthly in a mutual fund systematic investment plan that can give you a return at an expected rate of 12% (CAGR) for the next 10 years. That means you need to invest a total of INR 51.60 lakhs over the next 10 years to reach the goal amount of INR 1 Cr. Your gain on the investment would be INR 48.4 lakhs over the period of ten years.

Similarly, you can plan your SIP investments, compare various options, and align them with your goals and risk profile to build significant wealth. The SIP calculator app can help you in creating a SIP investment strategy. SIPs can be a powerful tool to create wealth. A disciplined approach is key to investment success.