Can a Rs 31,000 monthly SIP help you build a Rs 10 crore corpus? Expert explains

Building a corpus of Rs 10 crore is a common long-term financial goal for many investors. However, achieving such a target requires more than investing regularly through systematic investment plans (SIPs).

Financial planners believe that investors should periodically review their portfolios, increase SIP contributions in line with income growth, and maintain an appropriate asset allocation to maximise the benefits of long-term compounding. A disciplined investment approach, coupled with annual SIP step-ups, can significantly improve the chances of reaching ambitious wealth creation goals.

A 36-year-old investor reached out to ETMutualFunds and sought advice on whether the current investment strategy would be sufficient to accumulate a Rs 10 crore corpus over the next 20 years.


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The investor currently has a mutual fund portfolio worth Rs 4.1 lakh and invests Rs 36,000 every month. Out of this, Rs 31,000 goes into equity mutual funds, while Rs 5,000 is invested in Aditya Birla Sun Life Liquid Fund to build an emergency corpus.

The investor's equity portfolio consists of Axis Nifty 500 Index Fund, HDFC Mid Cap Fund, Nippon India Small Cap Fund, Parag Parikh ELSS Tax Saver Fund, Parag Parikh Flexi Cap Fund, SBI ELSS Tax Saver Fund, and ICICI Prudential Nifty 50 Index Fund. The emergency corpus currently stands at Rs 1.4 lakh, with a target of Rs 5 lakh.

Expert, Protima Dhawan, Director & Unit Head, Anand Rathi Wealth Limited, analysed the portfolio and told ETMutualFunds that the investor's current strategy is unlikely to achieve the desired corpus if the equity SIP remains unchanged.

As the total portfolio value is Rs 4.1 lakh and emergency fund portfolio is Rs 1.4 lakh so the total equity portfolio value is Rs 2.7 lakh as that will be a separate basket as emergency fund is not for growth and long term goals, it is for any short term emergency and liquidity.

So considering a portfolio value of Rs 2.7 lakh and based on an equity SIP of Rs 31,000 per month, an investment horizon of 20 years, and an assumed annual return of 13%, the portfolio is projected to grow to around Rs 3.53 crore, which falls significantly short of the Rs 10 crore target.

The expert believes the gap can be bridged by introducing a 15% annual step-up in the SIP amount. Under the same return assumptions, increasing the monthly SIP by 15% every year could potentially help the investor accumulate a corpus of around Rs 10 crore over the 20-year investment period.

The expert also advised the investor to continue building the emergency fund separately from long-term investments. The monthly allocation of Rs 5,000 towards the liquid fund should continue until the emergency corpus reaches the target of Rs 5 lakh.

Once that goal is achieved, the same amount can be redirected towards equity mutual funds, thereby increasing the monthly equity investment without putting additional pressure on monthly cash flows, the expert said.

Reviewing the portfolio, the expert observed that the investor's market-cap allocation requires some rebalancing. The ideal allocation suggested is 55% in large-cap funds, 23% in mid-cap funds, and 22% in small-cap funds.

The current portfolio is slightly over-allocated to large-cap funds by around 6% and under-allocated to mid-cap funds by a similar margin. Rebalancing the allocation could improve diversification and better align the portfolio with the recommended asset mix, said the expert.

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The expert also suggested reviewing investments in ELSS and index funds. If the investor has opted for the new tax regime, continuing investments in ELSS schemes may not be necessary because they no longer provide tax benefits. The expert further recommended avoiding index funds and ETFs, stating that they generally do not generate alpha over their benchmarks.

Among the existing holdings, the expert recommended continuing investments in HDFC Mid Cap Fund, Nippon India Small Cap Fund, and Parag Parikh Flexi Cap Fund. At the same time, the expert suggested exiting Axis Nifty 500 Index Fund, ICICI Prudential Nifty 50 Index Fund, Parag Parikh ELSS Tax Saver Fund, and SBI ELSS Tax Saver Fund.

To strengthen the portfolio further, the expert recommended adding Quant Large Cap Fund, ICICI Prudential Focused Equity Fund, and Bandhan Large & Mid Cap Fund.

According to the expert, while the investor has built a reasonably diversified portfolio, achieving a Rs 10 crore corpus will require a combination of disciplined investing, annual SIP step-ups, periodic portfolio reviews, and timely rebalancing.

Increasing investments as income grows, completing the emergency fund, and maintaining the right mix of equity funds can substantially improve the probability of reaching the long-term financial goal, the expert further said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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