For many middle-class investors, a portfolio worth a crore still feels like a distant dream. Many of our investors have touched this milestone recently. As India’s equity culture continues to grow and the Sensex rises, more investors are eager to capitalize on this momentum.
However, we always remind our investors that reaching a crore is just one milestone on your financial journey, not the final destination. While it’s natural to feel excited, remember that the best is yet to come. In fact, each successive crore could take less time than you might imagine in your wealth creation journey.
The sooner you reach that first crore, the quicker you’ll move on to your second, third, and beyond. As illustrated in the chart above, if you invest Rs 50,000 per month at an annual return rate of 15%, it may take nine years to reach your first Rs 1 crore. But don’t be discouraged—if you continue investing, your second crore could come in just three years, and your third in only 2.5 years. This is the extraordinary power of compounding. By the 18th year, you could be adding nearly Rs 1 crore every year to your wealth.
And if you think that’s impressive, consider this: in your 28th year, an additional Rs 4 crore could be added from the ongoing Rs 50,000 monthly investment, while the 30th year could see Rs 5 crore added.
This isn’t just limited to SIPs. For example, it might take ten years for Rs 25 lakhs to grow into Rs 1 crore at a 15% return rate, but the next crore could come in just five years, and the one after that in three years only.
Compounding is like a snowball rolling downhill
It starts small, but as it gathers more snow, it grows larger with each turn. Similarly, reaching your first crore may feel like a long and challenging process because you’re starting with a smaller base. But once you hit that milestone, your portfolio’s growth accelerates, making it quicker to reach the additional crore. You’ll find that the time taken to achieve each additional crore becomes shorter and shorter.
Magic of compounding turns your money into a powerful wealth-generating tool. The key is to stay invested and allow your money to work harder for you as it grows.
Disclaimer: Equity returns are not a straight line, as depicted in the chart. They fluctuate over time, with ups and downs. The above examples are for illustrative and educational purposes only.
