Mutual funds are powerful wealth creators, but only for investors who stay patient and allow compounding to work over the long term. If Rs 50 lakh is your target, the smarter way to reach it is to commit consistently and give your investments time to grow.
Wealth creation isn’t about speed; it’s about patience.
“If you invest Rs 20,000 every month in equity mutual funds, at a conservative 12% annual return, your corpus after 5 years comes to about Rs 16.5 lakh. Even if markets deliver a stronger 15% CAGR, the amount only grows to around Rs 17.5 lakh. Clearly, the Rs 50 lakh target in such a short time is unrealistic with this SIP. To get there in 5 years, one would need to invest closer to Rs 60,000 per month, or else extend the time horizon. This is where the real magic of compounding reveals itself. The same Rs 20,000 invested monthly for 10 years at 12% CAGR grows to nearly Rs 46 lakh, and at 15% CAGR it can cross Rs 55 lakh. In other words, time does the heavy lifting,” as per Khushi Mistry, Research Analyst at Bonanza.
Whereas Kirang Gandhi, Pune-based Financial Mentor says Rs 50 lakhs in 5 years is possible if you grow with your SIP. Begin at Rs 30,000 and increase it yearly with your income-Rs 40,000, then Rs 50,000, and finally Rs 60,000. With equity mutual funds at 18- 20% CAGR, discipline and step-up investing turn ambition into achievement. Remember, wealth is not built overnight but by raising your effort consistently.
Why Balance Between SIP & Lump Sum Matters?
To reach a target of Rs 50 lakhs in 5 years through mutual fund investments, a SIP of Rs 20,000 per month alone may not be sufficient, even at an expected CAGR of 12%. However, by combining a one-time lump sum investment of Rs 20 lakhs at the beginning with a monthly SIP of Rs 20,000, you can potentially achieve this goal. The lump sum grows over time with compounding, while the SIP adds consistent growth. At a 12% annual return, this strategy is well-aligned to meet your Rs 50 lakh target within 5 years, says Abhishek Bhilwaria, CEO at Bhilwaria MF.
Why Are Mutual Funds a Long-Term Bet?
“Expecting to achieve Rs 50 lakhs in just 5 years with a Rs 20,000 monthly SIP is simply not realistic. Even if you pick the best equity mutual funds, markets need time for compounding to work its magic. Keeping reasonable return expectations of around 12% to 17%, the same target can be achieved, but the horizon has to be closer to 10 years,” said Trivesh, COO Tradejini.
Skipping SIPs or stopping when markets correct can derail the whole plan. Inflation is another factor most people overlook, which makes small annual top-ups very important. In the first 2 years, it is better not to touch the investment at all, let the fund prove itself before reviewing. After that, check progress every six months.
Rs 20K SIP vs Rs 50 Lakh Target: What It Really Takes to Get There?
“Given a scenario of an SIP of Rs. 20,000/- p.m. for 5 years, the CAGR may be between 10 and 16% depending upon the category of equity-oriented MF. The values of your investment can be around. Rs. 16 lakhs, given a 12% CAGR. Expecting an Rs. 50 Lakh corpus with Rs. 20,000/- SIP for 5 years is realistically impractical. Either the SIPs need to generate more than 60% CAGR, or one needs to do a monthly SIP of Rs. 63,000/- (approx.) to achieve the desired corpus,” said Sameer Mathur MD and Founder of Roinet Solution.
With an Rs. 20,000/- SIP to achieve the desired corpus of Rs. 50 Lakhs, an investor will need to consider at least a 10-year regular investment option, Sameer Mathur further added.
Another way of achieving the desired goal before time is by stepping up your monthly SIP by a fixed amount or percentage every year. This is popularly known as step-up SIP, which automatically increases the SIP by a certain amount / percentage which you decide while starting your SIP or even in between your investment journey. One can also consider investments in lump sum (one-go), apart from regular SIPs, as and when one may have surplus money to be invested from a long-term perspective.
The Power of Compounding: How Can a Rs 20K SIP Cross Rs 50 Lakh Over Time?
Systematic Investment Plans (SIPs) in mutual funds are one of the most trusted ways to build long-term wealth. A common question among new investors is: If I invest Rs 20,000 every month, can I create Rs 50 lakh in 5 years?
“The numbers tell a different story. A Rs 20,000 SIP for 5 years adds up to Rs 12 lakh in total investment. Even with strong returns of 12-14% per year, the maturity amount would be around Rs 16-17 lakh. To touch Rs 50 lakh in just 5 years, the investment would need to deliver over 50% annual returnssomething not realistic in mutual funds,” said Ajay Lakhotia, Founder and CEO, StockGro.
“The same Rs 20,000 SIP over 10-12 years could realistically cross Rs 50 lakh, thanks to the compounding effect. Investors can also consider increasing their SIP amount gradually as income grows. The takeaway: SIPs are powerful wealth creators, but patience is the real key. For ambitious goals like Rs 50 lakh, align your time horizon with market realities instead of chasing quick gains,” Ajay Lakhotia further added.
The Math Behind SIPs: Why Rs 20,000/Month Won’t Make You a Crorepati Overnight?
Many investors aspire to create a corpus of Rs 50 lakhs in five years by investing Rs 20,000 per month through SIPs. However, this is practically impossible across any asset class. Even assuming an extraordinary annual return of 25%-a level rarely achieved and impossible to sustain consistently-the total value would still be less than Rs 25 lakhs, as per Dr Vikas Gupta, CEO and Chief Investment Strategist, Omniscience Capital.
“In the Indian context, equity mutual funds have historically delivered 12-15% annualised returns over the long term, while debt and hybrid funds offer even lower. Globally too, the average long-term equity return, such as in the US S&P 500, has been around 9-10%. Hence, expecting to double or triple these benchmarks in just five years is unrealistic,” Dr Vikas Gupta commented.
To genuinely target Rs 50 lakhs in five years, the SIP amount needs to rise to around Rs 60,000-65,000 per month, along with disciplined allocation to equities.
Investors should therefore align their goals with realistic return expectations and focus on increasing savings capacity, says Dr Vikas Gupta.
Three Smart Ways to Actually Reach Rs 50 Lakhs – Beyond the SIP Myth
Saksham Bhagat CEO & Co-Founder Swiftmoney.ai says, you cannot achieve Rs 50 lakhs in 5 years with just a Rs 20,000 monthly SIP. Even with an unrealistic 30% annual return (which is almost impossible to sustain), your Rs 20,000 monthly SIP would only grow to approximately Rs 18 lakhs in 60 months. But there are a few ways in which you can achieve Rs 50 Lakhs corpus.
1st way- Add Lumpsum Investment, keep Rs 20,000 monthly SIP, 5-year timeframe, we are taking a 14% average annual returns here, which is very practical in today’s scenario.
Your Rs 20,000 monthly SIP alone will grow to Rs 17 lakhs in 5 years
You need an additional lump sum of Rs 17 lakhs today to reach your Rs 50 lakh goal
This lump sum will grow to Rs 33.15 lakhs in 5 years at 14% returns
Total: Rs 16.85 lakhs (SIP) + Rs 33.15 lakhs (lumpsum) = Rs 50 lakhs
2nd way- Increase SIP Amount, keep 5-year timeframe, 14% average returns
You need to invest Rs 59,400 per month (instead of Rs 20,000), this nearly 3x increase in SIP will help you reach Rs 50 lakhs in 5 years. But this requires significantly higher monthly savings capacity
3rd way- Simpler and much more practical: Extend the investment timeline, keep Rs 20,000 monthly SIP, 14% average returns.
Your Rs 20,000 monthly SIP will grow to Rs 50 lakhs + in 10 years
This is the most realistic approach as it doesn’t require additional capital outlay, time becomes your biggest ally in wealth creation.
The returns taken for the above calculations and assumptions are based on average returns of multiple large, mid and small cap- equity-focused mutual fund schemes in India.