How to make Rs1 Crore using Mutual Funds

Introduction

Everyone dreams of becoming a crorepati (millionaire), but few know how realistic and achievable this is with proper financial planning and discipline. Suppose you open a recurring deposit account in a bank or post office and deposit just ₹6,000 per month (equivalent to ₹200 per day) at an annual interest rate of 6%. In that case, you can make Rs1 crore in about 37 years.

However, mutual funds—especially index funds and equity mutual funds—offer a better alternative with higher return potential. For instance, if you invest the same ₹6,000 per month in a Nifty 50 index fund via a Systematic Investment Plan (SIP), you could make Rs1 crore in 27 years at a 10% return, or just 24 years if the return is 12%.

Now compare this to stocks. While the potential returns may seem attractive, they come with significant risks. Frequent buying and selling, lack of expertise, and emotional decision-making often wipe out any gains. Even seasoned investors face losses. Hence, mutual funds—especially index funds—are ideal for long-term wealth creation for most individuals.

Investment Options and Time Required to Make Rs1 Crore

Years Required To Make Rs 1 Crore
Years Required To Make Rs 1 Crore (Rs 10000000)
Invested /Month (Rs) Interest Rate % Years Required (Approx)
First Option (6%)
5000640
10000630
15000625
20000621
Second Option (10%)
50001029
100001022
150001019
200001017
Third Option (15%)
50001522
100001517
150001515
200001513
Fourth Option (20%)
50002018
100002014
150002012
200002011

First Option – Recurring Deposit / Bonds / Liquid Funds (6% ROI)

If you prefer safety and capital preservation, recurring deposits in banks or post offices, or investment in bond or liquid funds may suit you. The expected ROI is 6% per annum, and to make Rs1 crore, it can take 21 to 40 years, depending on the amount invested.

This is one of the safest routes but also the slowest. In fact, by the time the corpus accumulates, it is more likely to benefit your successors than you.

Second Option – Large Cap / Broad Based Index Funds (10% ROI)

Investing in broad market index mutual funds such as Nifty 50, Nifty 500, or S&P 500 can yield approximately 10% annual return. Here, it may take 17 to 29 years to accumulate Rs1 crore.

Although not as safe as bank deposits, this method has a high success probability because these indices reflect the economic growth of the country. Moreover, these funds have low expense ratios, are transparent, and are passively managed.

Third Option – Midcap / Smallcap Equity Mutual Funds (15% ROI)

With a 15% ROI, time to make Rs1 crore shrinks to 13 to 22 years. These funds invest in high-growth potential companies, but the volatility is higher. Choosing a fund with strong downside protection, such as Kotak Emerging Equity Fund, can mitigate risks.

You may also consider flexi-cap funds, which balance risk by diversifying across small-, mid-, and large-cap stocks. Use platforms like Morningstar to analyze historical drawdowns and downside capture ratios.

Fourth Option – Strategy-Based Index Funds (20% ROI)

Here comes the sweet spot. If you choose strategy-based index funds like Nifty Alpha 50, Nifty Midcap150 Momentum 50, or smart-beta funds, and your portfolio earns around 20% annually, you could make Rs1 crore in just 11 to 18 years.

However, this option demands emotional strength to withstand volatility. During market corrections, your portfolio may drop 20–40%, testing your patience. But since these are index-based funds, they are rebalanced periodically, and prices typically recover as the market rebounds.

Fifth Option – Expecting ROI Above 20%

This option is theoretical. Even legendary investors like Warren Buffett have achieved an annual ROI of around 18% over decades. Expecting returns consistently above 20% is unrealistic and often leads to risky decisions and disappointment.

Buffett himself warned, “The stock market is a device for transferring money from the impatient to the patient.” So while you may create your own strategy and aim for higher returns, it is crucial to be practical and disciplined.

Why ROI Above 20% is Impractical to Make Rs1 Crore

Price Return of Different Classes of Indices Since April 2005

Till Date: 30 May 2025

Type of Indices Index Price Return (CAGR %)
Broad Based index Nifty 500 13.83
Broad Based index Nifty 50 13.62
Broad Based index Nifty Midcap 150 16.32
Broad Based index Nifty Smallcap 250 15.02
Strategy Index Nifty 200 Momentum 30 18.46
Strategy Index Nifty Smallcap 250 Momentum Quality 100 20.87
Strategy Index Nifty Alpha 50 20.16
Strategy Index Nifty Midcap 150 Momentum 50 22.59

Let’s examine long-term performance of index strategies. The table comparing ROI from April 2005 to May 2025 reveals:

Nifty Alpha 50 hovers around 20% CAGR.

Nifty Midcap150 Momentum 50 reaches 22.59% CAGR.

Other indices like Nifty Smallcap and Midcap offer 15–18% CAGR.

Even the highest-performing indices struggle to consistently exceed 20% returns. Moreover, 80% of actively managed mutual funds underperform their benchmark indices every year—even though they’re managed by highly experienced fund managers.

Hence, aiming beyond 20% CAGR is like betting against the odds.

How to Use Mutual Funds to Make Rs1 Crore

Everyone wants to make Rs1 crore quickly, but very few have the patience and discipline. Among all the options, the fourth option—strategy-based index mutual funds—offers the best balance of return and time.

Still, it requires mental strength. If you invest in smallcap mutual funds, even a 40% correction could happen during a bear market. Unless you understand how markets work, this could cause panic and premature exit from your SIP.

If you choose stocks, you’re already at a disadvantage. Most individual investors lack the tools, time, or temperament to beat the market consistently.

The only reliable path to reach Rs1 crore faster is:

Choose a strategy-based index fund with a strong long-term record.

Start a monthly SIP with whatever amount you can afford.

Stay invested, especially during market corrections, knowing that index funds recover over time.

Conclusion:

To make Rs1 crore through mutual funds, you don’t need a lottery ticket or stock-picking skills. All you need is a structured plan, realistic return expectations, and the discipline to stay invested. Whether it takes 11 years or 37, the power of compounding, especially through SIP in well-selected mutual funds, can help anyone reach this goal.

Choose your investment option based on your risk appetite, investment horizon, and emotional resilience. Remember: wealth creation is a marathon, not a sprint.

Disclaimer

“This article is for educational purposes only. Read our full disclaimer .”

Leave a Comment