Unveiling the Millionaire-Making Secret: See How Investing in Mutual Funds Can Make You a Fortune!

Every young investor who starts his journey in the stock market has a dream of becoming a millionaire someday. A dollar millionaire is a person who has 1 million dollars, which is currently roughly 8.2 crore Indian rupees. If you have been able to reach this goal, you can be assured of leading a comfortable and worry free life, irrespective of where you live. 

Now coming back to the million dollar question. 

Is it possible to become a millionaire by investing only in mutual funds?

The answer is yes. You can become a millionaire by investing only in mutual funds, as long as you can stay financially disciplined and committed to your goal.

First things first: Who is a dollar millionaire?

A dollar millionaire is commonly referred to as someone who has $ 1 million (USD) of wealth. This is equivalent to about Rs. 8.2 crore in Indian rupees as of 2023. If you have this much money in your portfolio, you can be sure to lead a comfortable life, living on your terms, taking care of your loved ones, and spending time with your family. 

However, be careful that the purpose of becoming a millionaire is not to show off your wealth and live a swanky lifestyle. 

Choice of investment vehicle

There are multiple investment options available for an investor that can help an investor become a millionaire, but here in this block post, we are going to focus on how to become a millionaire by investing only in mutual funds. The purpose of this post is to serve as a guide for people who have full-time jobs and want to save and invest their money judiciously but don’t have a lot of time to devote to stock market trading activities.

Here we will come up with a plan to invest money solely in mutual funds in such a way that leads to ultimate wealth creation and achieving our goal of becoming a millionaire.

Investment plan

When it comes to returns generated for investors in the long term, equities have outperformed all other asset classes. Here is a summary of returns generated by various asset classes in the long run:

Asset classExpected annual returnYears to double
Real estate8%9
Liquid fund6.5%11

Mutual fund investments are subject to market risk, and they are very volatile when you look at short-term performance. But if you have selected your mutual fund investments wisely and stayed with them for a long time, this will outperform all the asset classes by exceptional margins. 

Now let’s look at the calculation part.

Scenario 1  

  • Monthly SIP amount: 25,000
  • Assumed Rate of return: 13% 

This plan will take approximately 30 years to generate a corpus of Rs 8.84 crore.

Now let’s look at another scenario where we increase the SIP amount by 10% every year.

Scenario 2  

  • Monthly SIP amount: 25,000
  • Assumed Rate of return: 13%
  • Rate of increase in SIP: 10% every year

In this scenario, it will take approximately 25 years to generate a corpus of Rs 9.28 crore.

Now let’s do a side-by-side comparison of both scenarios. 

SIP amount20,000 (Without SIP step-up)20,000 (With 10% annual SIP step up)
Time taken 30 Years25 Years
Total corpus value8.84 crores9.28 crores
Total amount invested72 Lakh2.36 crores

The 10% annual increment in SIP has saved us five important years of our time. But there is also another aspect to this increase in SIP that should not be overlooked. In scenario 1, our total invested capital is 72 lakhs, and in scenario 2, our total invested capital is 2.36 crores. 

The difference in the invested amount in both cases is approximate (= 2.36-0.72) crores, which is the cost of five years that we saved in the second case. If the idea of saving 5 years by paying 1.6 crore extra sounds good to you, you can go with scenario 2, otherwise, you can go with scenario 1. 

Now let’s consider both cases with the SIP amount of 25,000.

SIP amount25,000 (Without SIP step up)25,000 (With 10% annual SIP step up)
Time taken 28 Years23 Years
Total corpus value8.48 crores8.56 crores
Total amount invested84 Lakh2.39 crores

Here the cost of saving 5 years to reach our goal is (= 2.39-0.85) 1.55 crores.

You must understand one thing from these calculations the game we are playing is long term so be sure to be invested for a long duration. You should also be emotionally prepared to withstand the ups and downs of the stock market. 

Now coming to the second part of the plan, let’s plan how to choose mutual funds for our goal.

How to choose mutual funds and an investment plan after selection

Mutual funds can be an outstanding investment if you learn how to select them wisely. First, you must understand that if you want to make it big in mutual funds then you have to stay invested through several market cycles. This means 20–25 years or longer. Staying with your investment for such a long period requires enormous patience, courage, and conviction. Let’s see the step-by-step process for the selection of mutual funds and to improve our return performance:

  1. Select a direct growth mutual fund that has performed in the top 25% of all mutual funds in the last 10 years. Most likely, it will have returns somewhere between 13% to 20%. 
  2. Avoid sectoral or thematic mutual funds. Because sectors can be in and out of favour. For retail investors, it is hard to determine the peak or bottom of sectoral cycles. Unless you know whether a particular sector is bottoming out or peaking, you won’t be able to time your investments and end up losing your hard earned money.  
  3. Try to research a bit about the performance and investment philosophy of the fund manager and look at the stock in the portfolio of the mutual fund.
  4. Choose a fund where you are comfortable with the fund manager and stocks in its portfolio.
  5. You can select two or three funds but don’t overdo it. Your selected funds should not have an overlap of more than 30%. (Here is how to check for mutual fund overlap.)
  6. It is not necessary to select the fund based on the top 3 or top 5 fund categories.
  7. As long as your chosen fund remains in the top 25 % of the mutual fund universe, it’s fine. 
  8. Be sure to start early because, in the process of compounding, time is your ally. 
  9. Doing SIP is absolutely paramount for our plan. 
  10. If you could start your journey with a larger initial investment, it would boost your compounding. 
  11. If you find yourself in a bear market during your investment journey, don’t be discouraged. You need to have courage and perspective. If your fund is down 25-30% from its peak, consider adding more in a lump sum or increasing your SIP. This exercise would reward you handsomely in the coming two to three years. 
  12. Avoid close-ended funds. It is better to stick with open-ended funds. 
  13. Stay away from dividend funds. It is suitable for investors who are looking for monthly income from investments. If you are in the early stages of life and want to grow your investment, stay with growth funds. 
  14. Should you stay away from funds with large AUM? Although it is difficult for funds with large AUM to move in and out of positions, if their performance fits our above discussed criteria, then we should consider investing in or staying with the fund. 
  15. Don’t spend too much time nitpicking over the management fees and turnover rates of the fund. In my experience, some of the best performing growth funds have high turnover rates.  Remember that the performance of the fund, in the long run, is the key. 


It is absolutely possible to generate a million dollar worth of portfolio by investing in mutual funds. But for this, you need to have three essential skills: 

  1. Courage: Don’t lose hope in bear markets. When everything seems gloomy, don’t sell, remember it’s an opportunity to add more. 
  2. Conviction: Stick with the funds of your selection. Don’t run around chasing the hot funds. 
  3. Patience: Growing wealth is going to take time. Time and again, you are going to come across stories of overnight success. Remember that people love to talk about overnight success. Most overnight successes have eventually turned into overnight failures, but sadly, they have not been much talked about. Have a steadfast belief in the process, it had worked for many others, and it will work for you. 


Can you become a millionaire by investing in mutual funds?

Yes, you can become a millionaire by investing only in mutual funds. But this requires a proper fund selection strategy and investing in it for the long term. 

How much money do you need to be a dollar millionaire in India?

In 2023, you need 8.2 crores to be a dollar millionaire in India. 

Which asset class has given the best return over the long term?

The equity asset class has given the best return in long term. It has beaten other asset classes by a wide margin. 

What is step-up SIP?

A step-up SIP is where you increase the amount of SIP every year. A SIP of 20,000 per month with a 10% step up will become a SIP of 22,000 per month next year and 24,200.

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