Power of Compounding: What should be your monthly SIP investment to accumulate Rs 5 crore retirement corpus if you start investing at age 30? See examples

Power of Compounding: Planning for retirement can feel daunting with rising inflation and the increasing cost of living. However, by leveraging the power of compounding through a Systematic Investment Plan (SIP), one can potentially turn a modest monthly investment into a substantial retirement corpus. If you begin investing Rs 8,000 each month in an SIP starting at age 30, you could accumulate up to Rs 5 crore by the time you retire. Learn how this disciplined approach can help you achieve financial freedom and secure retirement, even with a relatively small initial commitment.

Although SIPs are linked to market performance, they tend to offer better long-term returns compared to most other investment options.

How to build a Rs 5 crore corpus if you’re 30 years old: Calculation

If your age is 30 years, it means that you have 30 years left till your retirement. So, to accumulate a corpus of Rs 5 crore, you need to start a SIP of at least Rs 8,000 per month.

For example, if you start investing in SIP at the age of 20, you have plenty of time to build a corpus of Rs 5 crore, that too with a minimum amount of Rs 1600. But since you are already 30, you need to invest more. Know how, with complete calculations-

Let's assume you invest Rs 8000 monthly in SIP for 30 years with an annualised SIP return of 15 per cent. Over these 30 years, you will have invested a total of Rs 28,80,000. The estimated annualised return on this investment will be Rs 5,31,98,565, bringing your total wealth to Rs 5,60,78,565.

Invested Amount: Rs 28,80,000
Estimated Capital Gain: Rs 5,31,98,565
Total Value: Rs 5,60,78,565

Power of Compounding

Investing in mutual funds through SIPs is generally less risky than directly buying stocks. With average returns of around 15 per cent, SIPs tend to outperform most government schemes. Additionally, the power of compounding helps your money grow significantly over time, making long-term SIPs an excellent strategy for wealth creation.