How Rs 100 a Day Can Make You a Crorepati via Investing in Mutual Funds: Exploring the Magic of Small Savings!

People often overlook simple concepts, assuming they won’t lead to significant wealth, and instead, they seek out more complex strategies, particularly in the financial markets.

In the hustle and bustle of our daily lives, the idea of saving and investing for the future often takes a backseat. The enormity of long-term financial goals can be daunting, leading many to abandon the notion of small, consistent savings. However, what if I told you that with just Rs 100 a day, you could pave your way to financial security and even become a crorepati? Let’s delve into the magic of small savings and the power of compounding through systematic investment plans (SIPs) in mutual funds.

At first glance, Rs 100 a day may seem inconsequential. It's easy to overlook the potential of such a modest amount. But just like drops form an ocean, bricks build a citadel, and steps lead to milestones, small savings accumulate over time to create a substantial corpus.

Let’s break down the strategy: saving Rs 100 a day which means Rs 36,500 a year or it can also be taken as Rs 3,041.67 a month.

I would like to highlight the 50-30-20 rule provides a straightforward approach to personal finance management by dividing after-tax income into three key areas. 50 per cent of your income is allocated to essential needs such as housing, utilities, groceries, transportation, and healthcare. 30 per cent is reserved for discretionary spending, indulging in non-essential items like dining out, entertainment, travel, and hobbies that enrich your lifestyle. The remaining 20 per cent is dedicated to savings, encompassing contributions to emergency funds, retirement accounts, and investments.

If you are earning a monthly take-home salary of Rs 15,500, then you can easily allocate this small amount, which is Rs 3041.67 per month, towards your 1 crore corpus. This aligns with the financial rule of saving at least 20 per cent of your income.

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Now, let’s explore the potential of this seemingly modest investment. By channelling your monthly savings into a market-linked investment plan like mutual funds through SIPs, and assuming a conservative annual return of 12 per cent, the results are remarkable.

In just 15 years, your expected corpus could reach Rs 15,34,416, with a total investment of Rs 5,47,380. The real magic unfolds over time. Extending the investment to 20 years, the corpus grows to Rs 30,38,409, with an investment of Rs 7,29,840. By the 25-year mark, your investment accelerates, with an expected corpus of Rs 57,70,708, while your investment stands at Rs 9,12,300.

However, the pinnacle of this financial journey is reached after 30 years. With consistent monthly investments of Rs 3,041.66, you can achieve Crorepati status. Your total investment over three decades amounts to Rs 10,94,760, but the long-term capital gains soar to an impressive Rs 96,39,708, resulting in an expected wealth of Rs 1,07,34,468.

While 30 years may seem distant, the key lies in starting early. Initiating investments at 25 can lead to a corpus exceeding Rs 1 crore by the age of 55. Even if you are 30 years old, it is high time now, and probably you will reach your retirement status at the age of 60 years. Then, by investing from now, you can build a corpus of Rs 1 crore for your retirement.

In conclusion, never underestimate the potential of small savings. Like drops in an ocean, they have the power to create monumental wealth over time. By embracing the magic of SIPs and staying committed to your financial goals, you can pave the way to a secure and prosperous future, one Rs 100 at a time. Also, stocks have the potential to deliver multibagger returns but entail a greater amount of risk compared to mutual funds, which are known for their simplicity, systematic approach, and peaceful form of investing.

Now the decision is up to you whether you should go for Small-Cap, Mid-Cap, or Large-Cap funds, or if you will invest in index funds, as each investor has a different risk appetite and financial condition.

Disclaimer: The article is for informational purposes only and not investment advice.