Power of Rs 8,000 SIP: Can you build Rs 8 crore corpus with Rs just 8,000 monthly investment?
Generating Rs 8 crore with just Rs 8,000 monthly SIP may sound unreal but one can achieve this target through a systematic investment plan (SIP) that involves consistent and disciplined investment. Let’s understand how it can happen with the help of the power of compounding.
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SIP is a popular investment option that can help individuals build a sizeable retirement corpus. Even a small amount can make a big difference. The secret lies in early investment and staying consistent. The power of compounding plays a great role, it encourages people to create goals and then work towards them to achieve them. Similarly, if you invest Rs 8,000 in a monthly systematic investment plan (SIP) you can generate a retirement corpus of Rs 8 crore. Let’s understand it through calculation.
What is SIP in mutual fund?
A systematic investment plan (SIP) is a process of investing a fixed amount in mutual funds. You can invest daily, weekly, monthly, quarterly, or yearly, it depends on the choice of the investors.
Why should one invest in mutual fund SIP?
SIP is perfect for beginners, by investing even a small amount regularly, first-time investors can start their journey toward building a sizeable corpus.
Why should one start investing early?
The earlier you start the more time your money has time to grow. Let’s understand it through a calculation.
Early investment
- Investor A: Starts investing Rs 5,000 a month at age 25 and continues till age 45 (20 years).
- Total Investment: Rs 12,00,000
- Maturity Amount (at 12 per cent annual return): Rs 50,00,000
- Investor B: Starts investing Rs 5,000 a month at age 35 and continues till age 55 (20 years).
- Total Investment: Rs 12,00,000
- Maturity Amount (at 12 per cent annual return): Rs 28,00,000
By starting 10 years earlier, Investor A earns Rs 22,00,000 more, showcasing the power of compounding.
SIP: Calculation condition
- Target corpus: Rs 8 crore
- Monthly investment: Rs 8,000
- Annualised return: 12 per cent
How long it will take to create a corpus of Rs 8 crore
It will approximately take 39 years to generate Rs 8 crore.
How much can Rs 8,000 monthly SIP build in 10 years?
The invested amount will be Rs 9,60,000, the capital gains will be Rs 8,98,713, and the estimated retirement corpus will be Rs 18,58,713.
How much can Rs 8,000 monthly SIP build in 20 years?
The invested amount will be Rs 19,20,000, the capital gains will be Rs 60,73,183, and the estimated retirement corpus will be Rs 79,93,183.
How much can Rs 8,000 monthly SIP generate in 30 years?
The invested amount will be Rs 28,80,000, the capital gains will be Rs 2,53,59,310, and the estimated retirement corpus will be Rs 2,82,39,310.
How much can Rs 8,000 monthly SIP generate in 39 years?
The invested amount will be Rs 37,44,000, the capital gains will be Rs 8,05,25,416, and the estimated retirement corpus will be Rs 8,42,69,416.
(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)
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