What’s the 10:12:30 Formula?
This formula is your roadmap to becoming a crorepati (that’s a millionaire in Indian rupees, for the uninitiated). It’s built on three numbers:
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10 : Invest ₹10,000 every month.
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12 : Aim for an average annual return of 12% from mutual funds.
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30 : Stick with it for 30 years.
Sounds simple, right? But the magic lies in the power of compounding, which turns those small monthly investments into a massive corpus over time. I know, 30 years feels like forever, but if you’re in your 30s now, this plan could have you retiring at 60 with over ₹3 crore. Let’s dive into the numbers to see how it works.
The Math Behind the ₹3 Crore Dream
Picture this: you’re 30 years old, just starting your career, and you decide to invest ₹10,000 a month in a mutual fund SIP. You’re not splashing out on fancy cars or exotic vacations (yet), but you’re serious about building wealth. Here’s what happens if you follow the 10:12:30 formula:
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Monthly SIP : ₹10,000
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Expected Annual Return : 12%
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Investment Period : 30 years
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Total Invested Amount : ₹36,00,000 (₹10,000 × 12 months × 30 years)
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Returns from Compounding : ₹2,72,09,732
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Total Corpus : ₹3,08,09,732
Yes, you read that right. Your ₹36 lakh investment balloons to over ₹3 crore, thanks to the snowball effect of compounding. I ran these numbers through an SIP calculator, and they’re based on a conservative 12% return, which many equity mutual funds have historically delivered over the long term. Of course, markets can be unpredictable, so this isn’t a guarantee but it’s a solid starting point.
Why SIPs Are Your Ticket to Wealth
SIPs are like the slow-cooker of investing: you set it up, let it simmer, and come back to a delicious result. Here’s why they’re perfect for building a ₹3 crore corpus:
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Discipline Over Guesswork : Investing ₹10,000 every month keeps you consistent, no matter what the market’s doing. It’s like going to the gym showing up regularly matters more than trying to time the perfect workout.
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Rupee Cost Averaging : When markets dip, your ₹10,000 buys more units; when they soar, you buy fewer. Over time, this evens out the ups and downs, reducing risk.
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Compounding Magic : Your returns earn returns, and those returns earn more returns. It’s like planting a seed and watching it grow into a massive tree. The earlier you start, the bigger the tree.
Tips to Supercharge Your Crorepati Journey
Want to hit that ₹3 crore goal even faster? Here are a few tricks I’ve picked up:
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Step-Up Your SIP : Increase your monthly investment by 10% each year as your salary grows. This small tweak can shave years off your timeline. For example, bumping your SIP from ₹10,000 to ₹11,000 after a year makes a big difference over decades.
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Choose the Right Funds : Not all mutual funds are created equal. Look for equity funds with a strong track record (think 12–15% average returns over 10+ years). Funds like Quant Small Cap or Nippon India Small Cap have delivered over 20% CAGR in the past, though past performance isn’t a crystal ball.
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Stay the Course : Markets will crash. News will scream panic. Your neighbor might tell you to sell everything. Don’t. The 10:12:30 formula works only if you stick to it through the chaos.
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Consult an Expert : Before you dive in, talk to a financial advisor. They’ll help you pick funds that match your risk appetite and goals.
A Word of Caution
I’d love to say this is a foolproof plan, but investing isn’t without risks. Mutual funds are tied to the stock market, and returns can vary. A 12% average isn’t guaranteed every year some years might be higher, others lower.
Plus, inflation and taxes could nibble at your final corpus, so factor those in when planning. Always read the fine print and consult a financial advisor to tailor this strategy to your life.