Ram and Shyam, both aiming to become crorepatis through SIPs, differ in their return expectations. While Ram expects 12% CAGR, Shyam anticipates 15%. Discover how these assumptions affect their journey to ₹1 crore and beyond!
Ram and Shyam, two best friends from a tier-3 city, share a similar background. They not only attended the same school in their hometown but also went to college together in a metro city. Both are now in their mid-twenties and have stable jobs that provide them with a decent income. One evening, while reflecting on their past and discussing their future plans, they both had a common goal: they wanted to become crorepatis in their lifetime. Their plan? To invest through Systematic Investment Plans (SIPs).
Despite their similar backgrounds and common aspirations, there was one key difference between them: their expectations of returns from their SIPs.
Ram, with a more conservative approach, believed that a 12% Compound Annual Growth Rate (CAGR) return was realistic for his investment journey. His plan was to base his projections on this return expectation. Shyam, on the other hand, took a more aggressive stance. Confident in the resilience of the Indian economy, he argued that a 15% CAGR return from his SIP was achievable, calling India a "Golden Goose."
Both friends agreed on the potential of the Indian economy but differed in their assumptions about how fast their wealth would grow. Let’s take a closer look at their financial journeys based on these differing return expectations.
After investing ₹10,000 every month for 20 years at a 12% CAGR, Ram would have:
Shyam, with his 15% CAGR expectation, would reach ₹1 crore in just 18 years. Here's a breakdown of his growth:
If Shyam continues to invest for the full 20 years, his wealth will grow significantly beyond ₹1 crore. With a 15% CAGR, his future value at the 20-year mark will be:
The difference in the expected returns—12% vs. 15%—shows how varying assumptions can significantly impact the time taken to reach financial goals and the future value of investments.
Do you want to know how long it would take for you to reach ₹1 crore based on your expected rate of return? Use Ventura SIP Calculator to estimate your future wealth based on your return expectations and SIP contributions.
Disclaimer: The article is for informational purposes only and not investment advice.
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