Power of Compounding: How long it will take to build Rs 7 crore corpus with Rs 12,000, Rs 15,000, Rs 20,000 monthly investments?

A 7 crore retirement corpus is a huge amount. It can also be a sufficient amount for many individuals who are looking for financial freedom post retirement. This fund can be achieved with the help of compounding effects. The power of compounding is the method to generate earnings not only on the principal amount but also on the accrued growth of compounding periods. In this article, we will learn how long will it take to build a retirement corpus of Rs 7 crore by investing Rs 12,000, Rs 15,000, and Rs 20,000 through a monthly systematic investment plan (SIP) in a mutual fund scheme(s).

What is SIP

Systematic Investment Plan (SIP) allows investors to invest a fixed amount in a mutual fund scheme at regular intervals. The investment in SIP can be done according to the choice of the investor- daily, weekly, monthly, quarterly, half-yearly, or yearly. 

What is benefit of compounding?

It encourages long-term financial goal planning
Investors savings can grow faster
Reduces risk

Starting early is the key

Starting investing early can be more advantageous for investors than starting it late. They can not only review their investment strategy many times but they can also contribute enough time to let their corpus grow. 

SIP: Calculation conditions

Here, we will proceed with the calculations on 12 per cent annualised return on monthly SIP Rs 12,000, Rs 15,000, and Rs 20,000 to achieve the target corpus is Rs 7 crore. 

How long will it take to build Rs 7 crore corpus with Rs 12,000 monthly SIP?

It will take 35 years to build a retirement corpus of Rs 7 crore with Rs 12,000 monthly SIP. If you start investing at the age of 25, by the time you reach 60 you can accumulate this corpus. 

From Rs 12,000 monthly SIP to Rs 7 crore corpus at 12 per cent annualised return

The investment amount will be Rs 50,40,000, the capital gains will be Rs 7,29,03,229, and the estimated retirement corpus will be Rs 7,79,43,229. 

How long will it take to build Rs 7 crore corpus with Rs 15,000 monthly SIP?

It will take 33 years to build a retirement corpus of Rs 7 crore with Rs 15,000 monthly SIP. If you start investing at the age of 25, by the time you reach 58 you can accumulate this corpus.

From Rs 15,000 monthly SIP to Rs 7 crore corpus

The invested amount during this period will be Rs 59,40,000, and capital gains will be Rs 7,04,69,971. The estimated retirement corpus will be Rs 7,64,09,971.

How long will it take to build Rs 7 crore corpus with Rs 20,000 monthly SIP? 

It will take 30 years to build a retirement corpus of Rs 7 crore with Rs 20,000 monthly SIP. If you start investing at the age of 25, by the time you reach 55 you can accumulate this corpus.

From Rs 20,000 monthly SIP to Rs 7 crore corpus

The invested amount during this period will be Rs 72,00,000, and capital gains will be Rs 6,33,98,275. The estimated retirement corpus will be Rs 7,05,98,275.