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In such a situation, if your goal is to build a fund of 1 crore, it is important for you to know a few things. Today, we will explain two methods to help you fund 1 crore. Let us explain the calculations for lump sum and SIP.

SIP vs Lumpsum: Who is Right?

Whenever you invest, you should always invest according to your needs. If you don’t have a lump sum, you can save a small amount every month and invest through SIP. However, if you have a lump sum and want to get maximum returns, you should invest in a lump sum, because unlike a SIP, a lump sum pays interest on the entire amount from day one.

Understand through calculations

When will you become a millionaire by paying a lump sum of 2 lakhs?

Investment Amount: 2 lakhs

Years invested: 35 years

Interest on Investment: 12%

Total compensation: 1,05,59,924

By doing this calculation, if you invest 2 lakh today and leave it, after 35 years you will have a fund of more than 1 crore. However, if you increase your unit investment, you can reach 1 crore funds much sooner.

When will a SIP of 10,000 make you a millionaire?

Investment Amount: 10,000 per month

Years invested: 21 years

Total investment in 21 years: 25,20,000

Interest on Investment: 12%

Total compensation: 1,04,30,067

This means if you invest 10,000 every month, you will have a fund of over 1 crore in 21 years. If you do a step-up SIP, you will have funds of over 1 crore before the age of 21.

What is good for you?

If you have a regular salary and want to invest regularly every month in a disciplined manner to achieve your goals faster, you can opt for SIP. However, if you suddenly get a lump sum (like a bonus or money from selling a property) and are willing to forget about it for the next 25-30 years, you can safely invest in a lump sum.