By investing just Rs 5000 a month, you can become a crorepati, here's how

The Indian equity market is going through a phenomenal rise, and retail investors are also directly investing in shares and through SIPs. The latest information suggests that the SIP contribution has touched an unmatched high of Rs 21,262 crore in June 2024, which proves that investors are gaining confidence.

This trend is supported by the high returns of large mutual funds that have posted annual returns of between 40% and almost 90%. For example, the Axis Small Cap Fund delivered a return of 41.63% in the last year; the Aditya Birla Sun Life PSU Equity Fund, on the other hand, has given a return of 89.52% in between August 2023 and August 2024 with the help of a PSU rally.

The market gurus have advised that long-term SIP investments are capable of creating a lot of wealth. If an individual invests Rs 5,000 every month for 26 years at an average annual return of 12%, he or she would be able to accumulate Rs 1.07 crore by 2050. This projection shows that mutual fund investments can reap big returns when practised diligently.

The Association of Mutual Funds in India (AMFI) says that equity mutual fund investments rose more than fivefold to Rs 94,151 crore during the April-June quarter of 2024 over the corresponding period of the previous year. This has resulted in a rise in the assets under management (AUM) of the industry by 59% to Rs 27.68 lakh crore.

This growth is due to sound macroeconomic factors and favourable government policies. The reasons for higher allocations to equity mutual funds include higher than expected growth in tax collections and an increase in capital expenditure, as pointed out by Feroze Azeez, Deputy CEO of Anand Rathi Wealth.

The BSE Sensex and NSE Nifty are at new record high levels with an increase of 22% and 26%, respectively, and investors are bullish about further appreciation in the equity market. The investment environment is strong, and the returns from mutual funds are promising, which means that retail investors can take advantage of this upward trend.