This article would help you in following way:

1. Why SIP ?

2.How much to save?

3.When to start investing?

4. How long one should invest?

**Can you become a Crorepati by a monthly SIP?**

If you want to become Crorepathi in 10 years, you’ve to invest Rs.37,000/- every month.

If the time span is 20 years, then the investment amount per month is only Rs.6700/- for making Rs.1 Crore.

But if you happen to invest Rs.37,000/- every month for 20 years then you would end up having an astounding amount of Rs.5.54 crores.

**Bulk investment**

On the other hand, if you have some large capital lying with you ,and you want to invest in one go,the amount to achieve a target of Rs.1 Crore would be:

Rs. 25 Lakhs for investment tenure of 10 years

Rs. 6 Lakhs for a tenure of 20 years

**Rate of return (per annum)**

We assume an annualised return of 15% for arriving at the above numbers. Whereas around 17% has been the annualised return provided by Sensex during the last 38 years.

In the past, well managed diversified equity funds have provided returns far superior to the Sensex.

**How long one should invest?**

Any investment in equity market has to be preferably done for a minimum term of 10 years. In my opinion, an investment tenure of 20 years may make you wealthy beyond your imagination. It is the TIME in the market that is important and NOT timing the Market. There is a possibility that market may atleast go through 2 cycles in a period of 10 years. Any investment tenure lesser than that in equity may prove to be very risky. It is better to avoid equity market totally if your investment tenure is less than 10 years

**How much one should save?**

Not everyone is capable of lump sum investments.

But everyone is and should be capable of investing small sums every month over a long period of time.

Every family with an income of Rs.50,000/- should aspire for investing at-least Rs.10,000/- in SIP. For people who are planning for retirement, children’s education, daughter’s wedding etc. should roughly try to invest 20% of their monthly income in equity funds through SIPs.

**Start early**

Suppose A & B invest Rs.10,000 every month earning interest @15% p.a. on a monthly compounding basis. A starts at the age of 25 years and B starts at the age of 35 years. Both of them invest for 5 years (Rs.6 Lakhs) and hold their investments till 60 years of age.

A ’s investment would have appreciated to approximately Rs.12 crores whereas B ’s investment would have grown to only Rs.3 crores Thus, A ’s investment would have become four times more by just starting investing earlier than B, though the amount saved by them is the same.

Clearly, the **power of compounding** can have a significant impact on your wealth accumulation, especially if you remain invested over a long period of time.