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Have you ever wondered how small, consistent investments can grow into a big corpus over time? CA Abhishek Walia recently shared a simple strategy that shows the power of disciplined monthly investing. By starting with ₹10,000 every month and staying consistent, you could potentially build around ₹92 lakh in 20 years. Let’s break it down.
How This Simple Investment Formula Works
The formula is simple: invest a fixed amount every month, let compounding do its magic, and stay invested for the long term. For example:
- Monthly investment: ₹10,000
- Investment period: 20 years (240 months)
- Expected annual return: ~12% (typical for equity mutual funds over long term)
This approach leverages compounding, where your investment earns returns, and those returns themselves start earning returns, creating exponential growth over time.
Step-by-Step Calculation
Using the standard SIP future value formula:
Future Value (FV) = P × [((1 + r)^n – 1) / r] × (1 + r)
Where:
- P = monthly investment (₹10,000)
- r = monthly return rate (12% ÷ 12 = 1% ≈ 0.01)
- n = number of months (20 × 12 = 240)
After calculation, the total corpus ≈ ₹92 lakh after 20 years.
Growth Milestones
| Year | Approx. Corpus (₹) |
|---|---|
| 5 | 8,00,000 |
| 10 | 22,00,000 |
| 15 | 44,00,000 |
| 20 | 92,00,000 |
This shows the importance of consistency over time, rather than trying to time the market or make big one-time investments.
Why This Formula Works
- Discipline matters more than timing: Regular monthly investments reduce the risk of market volatility.
- Compounding grows wealth: Starting early gives your money more time to multiply.
- Professional guidance adds safety: Following CA advice ensures investments are diversified and tax-efficient.
Common Mistakes to Avoid
- Stopping investments during market downturns: Long-term consistency is key.
- Expecting instant results: Wealth builds gradually.
- Ignoring taxes: Keep in mind capital gains tax on equity funds.
Best Tips to Maximize Your Investment
- Start as early as possible to let compounding work fully.
- Increase contributions gradually with salary hikes.
- Reinvest dividends rather than withdrawing them.
- Review your portfolio yearly to ensure balance.
- Combine with tax-saving instruments like ELSS for extra benefit.
Important Assumptions
- The ₹92 lakh estimate assumes 12% average annual returns. Actual returns may vary depending on market performance.
- Investments must be consistent for 20 years without withdrawals.
- This is primarily for equity-based long-term SIPs, which carry moderate risk.
Conclusion
CA Abhishek Walia’s simple investment formula shows that small, disciplined monthly investments can grow into significant wealth. Starting ₹10,000 per month today, sticking to a long-term plan, and letting compounding work can help you reach around ₹92 lakh in 20 years. It’s a powerful example of how consistency beats occasional big moves.
FAQs
How much would I earn if I invest ₹5,000 per month instead?
Roughly ₹46 lakh in 20 years at 12% returns, about half the corpus of a ₹10,000 monthly SIP.
Is 12% return guaranteed?
No, it’s an average expected return for equity mutual funds; actual returns will fluctuate.
Can I stop investing for a few years?
Interruptions reduce the power of compounding; staying consistent is crucial.
Can I start later than 20 years?
Yes, but the corpus will be smaller unless you increase monthly contributions.
Is this strategy risky?
Equity investments carry market risk, but historically, long-term SIPs have delivered steady growth.