Power of Compounding: Can one build Rs 1 crore corpus with Rs 1,000, Rs 3,000 or Rs 5,000 monthly investment?

Even if you start your investment journey with a small amount of Rs 1,000, Rs 3,000, or Rs 5,000, there is a chance you can end up generating Rs 1 crore retirement corpus in the long run. With the help of the power of compounding and consistent investments, one can achieve their target goal. In the long run, even small amounts can add up to a big corpus, like Rs 1 Crore. The longer you invest, the more your money works for you. In this article, we’ll explore how these regular monthly systematic investment plans (SIPs) can help you reach your target corpus.

What is power of compounding?

Compounding is the process through which investments generate earnings that are reinvested to generate additional earnings. The sooner you start investing, the better it is. Starting early gives you more time to see the benefits of compounding.

Benefits of compounding

• Suitable for long-term investors
• Flexibility
• Encourages habit of saving at an early age

What is systematic investment plan (SIP)?

SIP is a process of investing in a mutual fund with a fixed amount, either daily, weekly, monthly, or yearly. 

Benefits of SIP

• Flexible Investment
• Long term growth
• Convenient

SIP calculation conditions

• Target corpus: Rs 1 crore
• Monthly investments: Rs 1,000, Rs 3,000, Rs 5,000
• Annualised return: 12 per cent 

How long it will take to generate Rs 1 crore with Rs 1,000 monthly SIP?

It will approximately take 39 years to achieve the target of Rs 1 crore.

From Rs 1,000 monthly SIP to Rs 1 crore at 12 per cent annualised return

The invested amount will be Rs 4,68,000. The estimated capital gains will be Rs 1,00,65,677, and the estimated retirement corpus will be Rs 1,05,33,677. 

How long it will take to generate Rs 1 crore with Rs 3,000 monthly SIP?

It will approximately take 30 years to achieve the target of Rs 3 crore.

From Rs 3,000 monthly SIP to Rs 1 crore

The invested amount will be Rs 10,80,000. The estimated capital gains will be Rs 95,09,741, and the estimated retirement corpus will be Rs 1,05,89,741.

How long it will take to generate Rs 1 crore with Rs 5,000 monthly SIP?

It will approximately take 26 years to achieve the target of Rs 1 crore.

From Rs 5,000 monthly SIP to Rs 1 crore

 The invested amount will be Rs 15,60,000. The estimated capital gains will be Rs 91,95,560, and the estimated retirement corpus will be Rs 1,07,55,560.

(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)