How equity and gold SIPs can turn Rs 24,000 into Rs 6 crore in nearly 2 decades

Long-term wealth creation is less about chasing returns and more about following a disciplined investment approach. Systematic Investment Plans (SIPs) in mutual funds have emerged as a preferred route for investors planning long-term goals such as retirement. By combining equity investments with allocations to gold and staying invested over extended periods, even modest monthly contributions can compound into a sizable corpus over time.

In a recent query on ET Now’s The Money Show, a 34 year old investor Rohit Rao said he wants to stay invested for at least 22 years and has been investing since last one year through SIPs.

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Current portfolio holdings

Currently, he invests Rs 24,000 every month, split almost equally across six equity mutual funds: Parag Parikh Flexicap, Kotak Multicap, ICICI Prudential Retirement Pure Equity Fund, Invesco India Large & Midcap, Motilal Oswal Midcap, and Bandhan Smallcap. Each fund receives a SIP of Rs 4,001, giving him exposure across market caps and investment styles.

According to Pankaj Mathpal, MD, Optima Money Managers, with a 22-year time horizon, equity is well suited for Rohit’s goal. However, a closer look at the portfolio mix and investment strategy reveals a few areas where small tweaks could make a big difference.

Does one really need a retirement-specific fund?

One common question investors face is whether a “retirement fund” is necessary to plan for retirement. The expert says that in Rohit’s case, the ICICI Prudential Retirement Pure Equity Fund is a solution-oriented fund with a five-year lock-in. While it is labelled as a retirement fund, it is essentially a diversified equity fund, similar in structure to flexi-cap offerings.

As long as the lock-in aligns with the investor’s long-term goal—and in this case, it does—there is no harm in holding it. However, investors should be clear that retirement planning depends more on asset allocation and discipline than on fund labels alone.

“As far as solution oriented fund is concerned, this ICICI Prudential Retirement Fund, see it is named as retirement fund but there is nothing different, it is a diversified fund as well as a flexicap fund, so he can stay invested, only thing is that there is a lock-in of five years, so he has to keep in mind that if he is investing in this fund, it has to be aligned with his goal that is simple. But as he has mentioned that he wants to invest for retirement, so it is okay that he keeps this fund in his portfolio,” Matphal said.

Assuming a long-term return of 12% per annum, Rohit’s current Rs 24,000 monthly SIP could potentially grow into a corpus of around Rs 3 crore over 22 years. While that sounds substantial, inflation will significantly erode purchasing power over such a long period.

This is where step-up SIPs become crucial. A 10% annual increase in SIP contributions—a strategy strongly recommended for long-term investors—can dramatically change outcomes. With a 10% yearly step-up, the same portfolio could grow to nearly Rs 6 crore over 22 years.

Given that income typically rises over time, increasing SIP amounts should not be optional but a core part of retirement planning. Simply put, a 10% step-up is non-negotiable for investors with long horizons.

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Portfolio diversification

According to the expert, Rohit’s portfolio is already well spread across large-cap, mid-cap, and small-cap funds, along with a flexi-cap and a solution-oriented fund. This diversification helps balance growth and volatility across market cycles. For a 22-year horizon, staying invested in these funds makes sense, provided the portfolio is reviewed periodically.

To further strengthen diversification, adding an allocation to gold can be considered. Gold has traditionally acted as a hedge during periods of equity volatility and macro uncertainty.

Mathpal said, “Portfolio is good. His portfolio is well diversified. He should stay invested in these funds and just to balance the portfolio if he wants to add gold fund and these days gold funds have become very popular also, so I thought I will just add if he wants to add one gold fund SIP in that I mean he can consider.”

Does it make sense to add gold at current levels?

A common concern with gold is investing when prices are near highs. However, when gold exposure is added through SIPs, timing becomes less relevant, the expert believes. Over a 10–20 year horizon, prices will move through multiple cycles, and SIPs help average costs.

Gold mutual funds or gold ETFs are both viable options. For SIP-focused investors, gold mutual funds are operationally simpler. For those comfortable with demat accounts, gold ETFs work equally well. Instead of a lump sum, a small SIP—say Rs 2,000– Rs 4,000 per month—can help build gold exposure gradually.

Starting early, staying invested for the long term, and increasing contributions regularly are the pillars of successful retirement planning. Rohit’s approach of investing Rs 24,000 via SIPs at the age of 34 puts him on the right path. By committing to a 10% annual step-up and maintaining a diversified portfolio—with a possible addition of gold—he can significantly improve his chances of building a meaningful retirement corpus that keeps pace with inflation.

(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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