Mutual fund SIPs help investors invest in a disciplined manner, eliminating the need to time the market. While some criticize investing through SIPs as having no merit, many experts believe that SIPs help instill disciplined savings and can accumulate large sums of money over a long period of time. Some of our blog readers ask how to create 5 billion, 10 million wealth.Some readers want to know about How to generate 100 million with SIP of 50,000 rupees per month in mutual funds. Is this really possible? If possible, what are some ways to create such a huge corpus. What are the risks to consider in achieving this massive corpus creation through SIP Mutual Funds?
What is this $10 billion goal?
Everyone is aiming for 1 billion rupees, 50 billion rupees or 100 billion rupees, but one of our readers, Pranav, wants to know how to reach 10 billion rupees with 50,000 SIP per month. He didn’t say when, but he expects it to be 25 to 30 years at the longest. It is impossible to create such a huge corpus with low investment and short tenure.
How much wealth can you build with 50,000 SIP?
Assuming mutual funds can generate annual returns of 10% to 12%, the ideal wealth that can be generated with a SIP of Rs 50,000 is:
So what revenue will 10 billion rupees bring?
If an investor invests 50,000 SIP per month for 30 years, the corpus that can be created will be between Rs 114 billion and Rs 17.6 billion. Let’s take a look at different scenarios on how this ambitious target of INR 100 crore can be achieved.
1) If an investor invests 50,000 SIP per month for 30 years and increases SIP by 10% each year, he/she will need to earn an annual rate of return of 16.5% to reach 1 billion rupees.
2) If an investor invests 50,000 SIP per month for 30 years and increases SIP by 15% each year, he/she will need to earn an annual rate of return of 13.2% to reach 1 billion rupees. From a return standpoint, it’s possible while still being aggressive, but increasing SIP by 15% will force investors to reconsider if it’s really possible.
3) If an investor invests 50,000 SIP per month for 30 years and increases SIP by 20% each year, it could reach Rs 176 million with an annual rate of return of 12%. They can reach his 100 crore target in his 27 years. From a return perspective, this is easily achievable, but is it really possible for an investor to increase his SIP by 20% each year?
The scenario above may not apply to all investors, so we need to see what is really possible.
Things to avoid to achieve lofty and big goals
#1 – Avoid investing in index funds only. Index funds can generate returns of around 10% per annum, so there’s no way these index funds can achieve such a large corpus.
#2 – Avoid investing in a small number of funds. Today’s best performing mutual funds are: The worst performing fund in the medium to long term. If you choose 2-3 funds and they perform poorly in the medium term, how will you reach your goal? So you need to increase the number of mutual funds.
#3 – Always diversify your mutual fund portfolio. Did you know that Balanced Advantage funds have generated over 15% annualized returns over the past two years while the stock market has generated minimal returns? We have told you that volatility will always benefit investors in the short, medium and long term.
#4 – Avoid lump sum investments. Always invest through SIP, or invest in 6-9 installments for a lump sum investment.
#5 – The higher the risk, the higher the return. I am not advocating day trading or F&O trading. The more risk you can take, the more likely your portfolio will generate higher returns.
#6 – Increase investment year-over-year to achieve larger corpus goals. When you have such a huge, aggressive target, don’t sit around without investing. This may not work, especially after several years of bear markets.
Which Mutual Fund Helps You Generate 100,000 Billion Profits With 50,000 SIP In Mutual Funds?
Data points are pulled from Moneycontrol, Valueresearch, and Niftyindices platforms. Because these funds aim for high returns, they also carry high risk. Only high-risk investors should consider this mutual fund portfolio.
#1 – Mid Cap Mutual Funds
The Mid-Cap Fund invests in mid-cap companies that have the potential to become blue-chip companies in the future.
Mid-cap mutual funds have historically generated higher returns compared to large-cap funds. Observing the Nifty Midcap 150 Index, it has a 16.1% annualized return since inception and has produced a 12% annualized return over the past five years. Funds in this category have been underperforming in the past year or two. However, we believe mid-cap funds can outperform in the medium to long term. Over the past decade, his 100% of active mid-cap mutual funds have returned between 16% and 22% annually. Does this prove correct?
Below are some of the Mid Cap Funds that will help us reach our Rs 100 crore target. We provide not only the SIP earnings table, but also the annual rate of return.
| annual rate of return | |||||
| scheme name | 3 years | 5 years | 10 years | crisis rank | Gold (Cr) |
|---|---|---|---|---|---|
| Kotak Emerging Equity Fund | 37% | 15% | twenty one% | Four | 25,972 |
| edelweiss midcap fund | 37% | 14% | twenty one% | Four | 2,787 |
| SBI Magnum Mid Cap Fund | 41% | 15% | twenty one% | Four | 9,370 |
| Invesco India Mid Cap Fund | 32% | 15% | twenty one% | 3 | 2,803 |
| HDFC Mid Cap Investment Opportunity Fund | 37% | 13% | 20% | Four | 36,912 |
| SIP return | |||
| scheme name | 3 years | 5 years |
10 years |
|---|---|---|---|
| Kotak Emerging Equity Fund | 20% | twenty one% | 20% |
| edelweiss midcap fund | twenty one% | twenty one% | 19% |
| Invesco India Mid Cap Fund | 18% | 19% | 18% |
| HDFC Mid Cap Investment Opportunity Fund | twenty three% | twenty one% | 18% |
| SBI Magnum Mid Cap Fund | twenty four% | twenty three% | 18% |
#2 – Small cap mutual funds
The Small Cap Fund invests in Indian small cap companies. Small-cap stocks in general can grow aggressively, but business slowdowns are also occurring at a fast pace, so investing in these small-cap stocks is risky.
Small-cap mutual funds have historically generated higher returns than mid- and large-cap funds. The Nifty Smallcap 250 Index has generated a 14.6% annualized return since inception and an 8% annualized return. Even funds in this category have underperformed in the past year or two. But again, just like mid-cap funds, even small-cap funds outperform in the medium to long term. Over the last 10 years, 100% of active small cap mutual funds have returned between 16% and 27% annually, proving that these are high yielding funds.
Below are some of the small cap funds that will help us reach our Rs 100 crore target. We provide not only the SIP earnings table, but also the annual rate of return.
| annual rate of return | |||||
| scheme name | 3 years | 5 years | 10 years | crisis rank | Gold (Cr) |
|---|---|---|---|---|---|
| Japan India Small Cap Fund | 51% | 18% | 27% | Four | 26,293.50 |
| SBI Small Cap Fund | 41% | 16% | 26% | 3 | 16592 |
| DSP Small Cap Fund | 43% | 13% | twenty three% | 2 | 9,408.99 |
| Kotak Small Cap Fund | 47% | 17% | twenty one% | 3 | 9,230.11 |
| Franklin India Small Business Fund | 45% | 12% | twenty one% | 3 | 7,592.61 |
| SIP return | |||
| scheme name | 3 years | 5 years | 10 years |
|---|---|---|---|
| Japan India Small Cap Fund – Direct Plan | 31% | 28% | twenty four% |
| SBI Small Cap Fund – Direct Plan | twenty three% | twenty four% | twenty three% |
| Kotak Small Cap Fund – Direct Plan | twenty three% | twenty five% | twenty one% |
| DSP Small Cap Fund – Direct Plan | twenty three% | twenty three% | 19% |
| Franklin Small Business Fund of India – Direct Plan | 28% | twenty three% | 18% |
#3 – Dynamic Asset Allocation Fund
All of this is fine, but what if the stock market underperforms in the short to medium term? You also need a strategy to beat that scenario, right? There are several possible reasons for the stock market’s poor performance, including pandemics like Covid-19, negative global impacts, high inflation, and a slowdown in the Indian economy. One of the best ways to overcome this is to invest in dynamic asset allocation mutual funds. There are a few such hybrid funds, but our analysis shows that the following funds have demonstrated stable performance over the medium to long term, generating annualized returns of 13% to 14.5%.
| annual rate of return | |||||
| scheme name | 3 years | 5 years | 10 years | crisis rank | Gold (Cr) |
|---|---|---|---|---|---|
| HDFC Balanced Advantage Fund | 30% | 13% | 15% | Four | 54,412.00 |
| ICICI Prudential Balance Advantage Fund | 20% | Ten% | 13% | – | 4,584.00 |
| SIP return | |||
| scheme name | 3 years | 5 years | 10 years |
|---|---|---|---|
| HDFC Balanced Advantage Fund | twenty one% | 18% | 15% |
| ICICI Prudential Balance Advantage Fund | 12% | 12% | 12% |
#4 – Sector mutual funds
Sectors such as banking, infrastructure and IT have outperformed over the medium to long term. However, investing in sector mutual funds is riskier. As an example, the IT/Technology sector is currently underperforming over the past year, so such sectors may be on a downward trend in the short term. Investors can therefore have some exposure to such sector funds, but should not have them as the fund’s primary portfolio.
Below are some of the sector funds that will help reach the Rs 10 crore target. We provide not only the SIP earnings table, but also the annual rate of return.
| annual rate of return | ||||||
| sector | scheme name | 3 years | 5 years | 10 years | crisis rank | Gold (Cr) |
|---|---|---|---|---|---|---|
| IT/technology | SBI Technology Fund | 32% | 20% | 20% | NAMore | 2,812.00 |
| infrastructure | Kotak Infrastructure Fund | 42% | 14% | 18% | Four | 802.00 |
| banking | ICICI Pull Banking and Fin Services Fund | 32% | Ten% | 16% | NAMore | 6,313.00 |
| SIP return | ||||
| funds | scheme name | 3 years | 5 years | 10 years |
|---|---|---|---|---|
| IT/technology | SBI Technology Fund | 14% | 20% | 18% |
| infrastructure | Kotak Infrastructure Fund | 31% | twenty four% | 18% |
| banking | ICICI Pull Banking and Fin Services Fund | 18% | 14% | 15% |
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