SIP Calculator: How Can I Create A Corpus of Rs 1 Cr By The Age of 50 With Rs 6-12 Lakh Salary At 35?

For many Indian professionals, building a sizable equity portfolio often seems intimidating, especially with a modest salary and rising expenses. However, disciplined investing, even starting at 35, can still help you accumulate a substantial corpus. This article provides a roadmap to build a Rs 50 lakh equity portfolio by age 50, balancing realistic assumptions, market data, and prudent financial planning.

Assumptions for the Calculation

• Starting age: 35
• Target age: 50 (15 years)
• Annual salary: Rs 6 lakh to Rs 12 lakh (middle-income group)
• Monthly investible surplus: Rs 10,000 to Rs 20,000
• Expected annualised equity returns: 12% (Nifty 50 TRI long-term CAGR: ~12% over 20 years, as per NSE data)
• Consistent SIP contributions

The Power of SIP: Data-Backed Illustration

Let's break down how achievable this goal is with the Systematic Investment Plan (SIP) approach:

As the table created by Navin Jain, Cofounder & CEO, NeoNest Finserve, even with a SIP of Rs 10,000 per month, one can achieve the Rs 50 lakh target by 50.

Source: NeoNest Finserve

The above graph is for illustrative purposes. Past performance doesn't guarantee future returns.

Why 50 Lakh Is a Sensible Target?

A Rs 50 lakh corpus, though not extravagant, can provide significant financial security in later life. With inflation-adjusted returns, this amount can supplement retirement savings, fund children's education, or serve as a contingency reserve. At an annualised inflation of 5%, Rs 50 lakh today would be worth approximately Rs 1 crore in purchasing power 15 years down the line.

Key Strategies to Stay on Track

Navin Jain, Cofounder & CEO, NeoNest Finserve has recommended the below-listed key strategies to follow to hit the goal.

Start Immediately: The earlier you begin, the more you benefit from compounding. Procrastination is the biggest wealth destroyer.

Automate Your Investments: Set up automatic SIPs to ensure discipline and avoid emotional decision-making.

Equity Allocation: Primarily invest in diversified equity mutual funds:

• Large-cap funds (40-50%)
• Flexi-cap / Multicap funds (30-40%)
• Mid-cap/small-cap funds (10-20%)

Annual Step-Up: As your salary grows, increase your SIP contribution by 5-10% annually. This can significantly enhance the final corpus.

Avoid Timing the Market: Focus on staying invested, irrespective of short-term volatility.

Review Annually: Rebalance your portfolio based on market performance and changing risk appetite.

Reference Studies and Market Data

• According to AMFI data (2023), SIP accounts in India crossed 7 crore, reflecting increasing retail participation.
• The CRISIL AMFI Mutual Fund Performance Index shows that diversified equity funds have delivered an average CAGR of 12-14% over 10-year periods.
• As per a 2023 Value Research report, investors who remained invested in large-cap equity funds for over 15 years earned average returns above 11.5%, demonstrating the long-term wealth-building power of equities.
• SEBI's 2023 annual report highlighted that the mutual fund industry AUM has grown from Rs 20 lakh crore in 2017 to over Rs 50 lakh crore by 2023, primarily driven by retail SIP investors.

Addressing Common Concerns

1. "My salary is modest. Can I still do this?" Yes. The key lies in budgeting and prioritising savings. Even Rs 10,000 monthly amounts to 20% of a Rs 6 lakh annual salary.
2. "What if markets underperform?" Historical data from NSE and BSE suggest that over rolling 15-year periods, equity markets have consistently delivered inflation-beating returns. Diversification across asset classes can also provide stability.
3. "Isn't equity risky?" Short-term fluctuations are normal. Over the long-term, equities have proven to be the best asset class for wealth creation. As per S&P BSE Sensex historical data, the index has grown from around 3,000 in 1995 to over 65,000 in 2024, reflecting a CAGR of over 12%.

The Behavioural Edge

According to a 2023 AMFI study, investors who stayed invested in equity mutual funds for over 10 years earned an average CAGR of 12-14%, compared to those who exited prematurely and earned sub-8% returns. Patience and discipline are non-negotiable.

A Morningstar India report (2023) further supports that investors who timed the market poorly often eroded up to 30-40% of their potential returns compared to disciplined SIP investors.

Tax Advantage of Equity Investing

Long-term capital gains (LTCG) up to Rs 1 lakh annually from equity mutual funds are tax-exempt under current Indian tax laws (as of FY 2024-25). This further enhances the effective return on your investment, stated Navin Jain.

Final Thought

Building a Rs 50 lakh equity portfolio by age 50 on a modest salary is not only achievable but highly realistic with proper planning. The winning formula is early start + discipline + consistency + long-term vision. In a country where financial literacy is still evolving, adopting these simple principles can be the key differentiator in securing your financial future.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor GoodReturns. The author, nor the brokerage firm nor GoodReturns would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.