Its tuff question. I asked ChatGPT whether it has an answer. It responded, but with wrong info. It responded with an incorrect response again and again. Finally, it apologised for giving wrong info. It could be really a small amount to invest when someone hears 5K SIP in a mutual fund, however it is easy to save and invest. No one can give the excuse that they cannot save such small amount. In this article we would discuss How to make 1 Crore with 5,000 SIP in mutual funds. We would also provide model mutual fund portfolioS on how this can be achieved through SIP for low risk, moderate risk and high risk investors.
Also Read: ChatGPT Recommended Mutual Funds to invest in 2023
ChatGPT response to create 1 crore with 5,000 SIP
I asked ChatGPT, Can I make 1 Crore with 5,000 SIP in Mutual Fund I It responded that we need 30.67 years with 12% returns. I asked again. It apologized and said we need 38.67 years with 12% returns.
I got fed-up and then left ChatGPT and went ahead with my analysis.
How much money one can create with 5K SIP per month?
While it would depend on risk appetite and tenure of investment, historically stock markets have generated 10% to 12% returns. Considering these returns, if you invest 5,000 per month through SIP, you can generate below wealth.
10 year time frame – 10.3 Lakhs to 11.3 Lakhs
20 year time frame – 38.3 Lakhs to 50 Lakhs
30 year time frame – 1.1 Crore to 1.75 Crores
Means you can easily make out a crore if you invest for 30 years. I know that you are not interested to wait till such long time.
Are there any alternate ways to create 1 crore faster in mutual funds?
Also Read: Can we create Rs 100 Crores with 50,000 SIP?
How to create 1 crore faster with 5K SIP in mutual funds?
If you want to invest 5,000 per month in mutual funds, however, do not want to wait till 30 year time frame, let us see various scenarios on how to achieve this goal faster.
Option-1 (5K SIP + 12% Returns + 10% increase in SIP every year) – You can create 1 Crore in 20 years. This is simple to achieve as salaried persons can get increments year on year and business people can have increased income year on year.
Option-2 (5K SIP + 15% Returns + 10% increase in SIP every year) – You can create 1 Crore in 18 years.
Expecting 15% returns through mutual fund is high expectation, however investors can take high risk and still achieve this goal in medium to long term.
When I say high risk, I am not talking about money that gets vanished in futures and options or forex trading. I am talking about investing in high risk high return mutual funds and waiting patiently till you achieve your goal, keeping emotions aside.
Option-3 (5K SIP + 12% Returns + 20% increase in SIP every year) – You can create 1 Crore in 15.8 years. Now don’t criticize me, I just gave this as one option.
Option-4 (5K SIP + 15% Returns + 20% increase in SIP every year) – You can create 1 Crore in 15 years.
Again, 15% returns are very high, but still possible.
The above scenarios might not fit for all investors, hence they should check what is suitable to them and proceed.
How to maximize returns from mutual funds in India?
Here are simple steps to follow:
1) Choose right mutual fund based on your risk appetite, tenure and financial goals.
2) Diversify your mutual fund investments. Don’t invest in single category of large cap, mid cap or small cap segment. You should spread across categories.
3) Invest for the long term. Don’t invest and keep monitoring every day. If you are falling in the category of daily monitoring, you have chosen wrong investment option.
4) Invest regularly through SIP. Invest in lumpsum whenever you have yearly bonus, yearly or quartely variable pay etc.,
5) Review your portfolio once in a quarter or once in a year at least and compare with its peers on how well your portfolio is performing. Make adjustments if necessary.
Understanding mutual funds before jumping to actual mutual funds list
Before we get into the mutual funds list, you should understand the investment objective and risk profile of various mutual funds:
1) Largecap Funds: These funds invest majorly in large cap stocks that are part of Nifty100. These funds provide stable returns in the medium to long term.
2) Midcap Funds: These funds majorly invest in Midcap stocks i.e. 101st to 250th in terms of market capitalization. The stocks falling under this portfolio could be future blue chip stocks. Hence, the returns from such funds are higher. On the other hand, these stocks are highly volatile and high risk. Hence, high risk investors can invest in such mid cap funds.
3) Smallcap Funds: These funds majorly invest in small cap stocks i.e. 251st onwards in terms of market capitalization. The stocks falling under this portfolio could turn to be future midcap stocks. Hence, the returns from such funds are higher. On the other hand, these stocks are highly volatile and in some cases are high illiquid and hence are very high risk. High risk investors only can invest in such funds.
Which mutual funds can create 1 Crore with 5,000 SIP?
With above analysis, we came to conclusion that if investors invest 5,000 per month SIP in mutual funds between 15 years to 20 years and with the increase in SIP values every year, they can create 1 crore.
Here are some of the mutual fund model portfolios that one can review and invest based on the risk appetite.
Model Portfolio of Mutual Funds for high risk investors
This mutual fund portfolio consists of 1 large cap fund, 2 midcap funds and 2 small cap funds. More of midcap and smallcap has been added to achieve this goal faster and less on large cap to provide stability. While past returns are indicative and this can give you an indication where you might land in terms of wealth. One can invest Rs 1,000 SIP each in these funds. Below are the 5 mutual funds with annualised SIP returns.
| Scheme Name | 3Y | 5Y | 10Y |
|---|---|---|---|
| Kotak Emerging Equity Fund | 22% | 22% | 20% |
| Edelweiss Mid Cap Fund | 22% | 23% | 20% |
| Nippon India Small Cap Fund | 34% | 30% | 25% |
| SBI small cap fund | 23% | 24% | 23% |
| Nippon India Largecap Fund | 22% | 18% | 16% |
Model Portfolio of Mutual Funds for Moderate to high risk investors
This mutual fund portfolio consists of one fund each from large cap, midcap, smallcap category and balanced advantage fund category. This portfolio is like all seasons portfolios which works in all market scenarios. While past returns are indicative and this can given an indication where you might hand in creation of your 1 crore goal. One can invest Rs 1,250 SIP each in these funds. Below are the 5 mutual funds with annualised SIP returns.
| Funds | 3Y | 5Y | 10Y |
|---|---|---|---|
| Nippon India Largecap Fund | 22% | 18% | 16% |
| Kotak Emerging Equity Fund | 22% | 22% | 20% |
| SBI small cap fund | 23% | 24% | 23% |
| HDFC Balanced Advantage Fund | 21% | 18% | 15% |
What about Moderate Risk takers?
If you think you want to take moderate risk, then you can invest in large cap funds and balanced advantage funds. You can pick-up the funds from the above list or from our previous articles in these categories.
Also Read: 5 Mutual Funds with 3 Year returns up to 338%
Can I become Crorepati with these funds?
Past performance is an indication how well such funds performed in various market cycles, however does not guarantee the returns. Instead of investing in 1-2 funds, investing in 4 to 5 funds can definitely help you to achieve your goals.
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