Power of Compounding: For individuals aiming to build a substantial corpus through disciplined and consistent investments, SIP (Systematic Investment Plan) in mutual funds can be a good option. It is a market-linked investment plan that allows investors to contribute small amounts periodically, rather than making lump-sum investments. Additionally, it allows you to take advantage of the power of compounding, offering the potential for market growth over time.

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Let’s take a look at how long it would take to accumulate a retirement corpus of Rs 3 crore with a consistent monthly SIP investment of Rs 7,000, assuming an annual return of 12 per cent.

How many years will it take for your Rs 7,000 monthly SIP investment to grow to Rs 3 crore corpus?

To build a corpus of Rs 3 crore or more, an investor would need to invest for at least 32 years in SIP mutual funds.

Power of Compounding: Calculations for building Rs 3 crore retirement corpus

In 32 years, the investor will contribute a total of Rs 26,88,000. With an estimated annual return of 12 per cent, the capital gain earned would be Rs 2,88,77,079. When you add the principal investment and capital gains, the total corpus after 32 years will be Rs 3,15,65,079.

- Total Investment: Rs 26,88,000  
- Expected Capital Gain: Rs 2,88,77,079  
- Total Corpus Received: Rs 3,15,65,079  

SIP Investment Summary

 

Year SIP Amt /
Month		 Total Invested
Amt		 Interest Amt /
Year		 Maturity
Value
Year1 7,000 84,000 5,665 89,665
Year2 7,000 1,68,000 22,702 1,90,702
Year3 7,000 2,52,000 52,554 3,04,554
Year4 7,000 3,36,000 96,844 4,32,844
Year5 7,000 4,20,000 1,57,405 5,77,405
Year6 7,000 5,04,000 2,36,299 7,40,299
Year7 7,000 5,88,000 3,35,853 9,23,853
Year8 7,000 6,72,000 4,58,686 11,30,686
Year9 7,000 7,56,000 6,07,751 13,63,751
Year10 7,000 8,40,000 7,86,374 16,26,374
Year11 7,000 9,24,000 9,98,304 19,22,304
Year12 7,000 10,08,000 12,47,765 22,55,765
Year13 7,000 10,92,000 15,39,518 26,31,518
Year14 7,000 11,76,000 18,78,926 30,54,926
Year15 7,000 12,60,000 22,72,032 35,32,032
Year16 7,000 13,44,000 27,25,647 40,69,647
Year17 7,000 14,28,000 32,47,446 46,75,446
Year18 7,000 15,12,000 38,46,075 53,58,075
Year19 7,000 15,96,000 45,31,278 61,27,278
Year20 7,000 16,80,000 53,14,035 69,94,035
Year21 7,000 17,64,000 62,06,719 79,70,719
Year22 7,000 18,48,000 72,23,272 90,71,272
Year23 7,000 19,32,000 83,79,401 1,03,11,401
Year24 7,000 20,16,000 96,92,810 1,17,08,810
Year25 7,000 21,00,000 1,11,83,446 1,32,83,446
Year26 7,000 21,84,000 1,28,73,784 1,50,57,784
Year27 7,000 22,68,000 1,47,89,154 1,70,57,154
Year28 7,000 23,52,000 1,69,58,093 1,93,10,093
Year29 7,000 24,36,000 1,94,12,761 2,18,48,761
Year30 7,000 25,20,000 2,21,89,396 2,47,09,396
Year31 7,000 26,04,000 2,53,28,832 2,79,32,832
Year32 7,000 26,88,000 2,88,77,079 3,15,65,079

Key Considerations for SIP Investors

While SIPs offer a structured approach to investing, it’s important to keep in mind that they are market-linked, meaning returns are not guaranteed. The assumed 12% return is an estimate and may fluctuate depending on market conditions. Therefore, it is crucial to regularly review and adjust your investment strategy to stay aligned with your retirement goals.