Building a large corpus through SIPs requires a combination of disciplined investing, realistic return expectations, and proper asset allocation. While aggressive investors may aim for ambitious wealth targets within shorter time frames, the final outcome depends heavily on monthly contribution levels and portfolio strategy.
A similar query came from Dev from Gurugram, Haryana and a viewer of The Money Show who is currently investing Rs 85,000 per month through SIPs and wants to know whether he can accumulate Rs 2 crore in the next seven years. He also sought clarity on whether his current fund selection is appropriate and how much additional investment may be required to meet the target.
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According to Samir Shah, the current SIP amount may not be sufficient to achieve the desired corpus within the specified timeline. Assuming the portfolio generates a 12% annualised return, a monthly SIP of Rs 85,000 over seven years is expected to build a corpus of around Rs 1.1 crore, which falls significantly short of the Rs 2 crore target.
To bridge this gap, the SIP contribution may need to be increased substantially. Based on the calculations, the monthly SIP would have to rise by nearly Rs 68,000, taking the total monthly investment to around Rs 1.53 lakh. At this level, the probability of reaching the Rs 2 crore target in seven years improves considerably, assuming similar return expectations.
On the portfolio side, the existing fund selection appears broadly suitable for an aggressive investor. Exposure across multicap, smallcap, and growth-oriented funds provides diversification as well as higher growth potential. However, given that the investment horizon is relatively short at seven years, managing risk becomes equally important as the investor moves closer to the goal.
The expert suggests gradually reducing exposure to volatile midcap and smallcap funds in the later stages of the investment journey. As the target date approaches, shifting a portion of the portfolio towards largecap or passively managed index funds can help stabilise returns and protect the accumulated corpus from sharp market fluctuations.
“Only thing which I would like to add here is initially say, your time horizon is only seven years and when you are reaching closer to your goal. In that situation, you have to reduce your exposure from small and midcap fund and increase your exposure to largecap or passively managed fund. This will help you to stabilise your overall portfolio,” Shah said.
This strategy becomes particularly important because equity markets can witness heightened volatility in the short term. Investors nearing a financial goal may not have enough time to recover from a major market correction. A phased shift towards relatively stable categories can therefore help preserve gains while maintaining reasonable growth potential.
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The broader lesson for investors is that ambitious wealth targets require a balance between return expectations, contribution levels, and risk management. Increasing SIPs over time and rebalancing portfolios closer to the goal can significantly improve the chances of achieving long-term financial objectives.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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