Rs 4,700 Monthly SIP for 35 Years vs Rs 47,000 Monthly SIP for 14 Years: Which can give you higher corpus in long term? See calculations

A systematic investment plan, or SIP, is a sort of investment that allows you to save money while also growing it over time. A SIP allows you to invest a small amount of money regularly rather than a huge sum all at once. Meanwhile, most people face issues deciding whether to invest via the lump sum route or to invest through SIP. Both of these investment methods have their pros and cons.

Benefits of SIP

There are many benefits of SIPs, take a look at a few of them:

1- Power of compound interest
You can earn compound interest when the returns on your investments begin to generate returns. Regular investing through SIPs allows you to reinvest your gains. Investing for a lengthy period of time is the best approach to maximise your gains. 

2- Rupee cost averaging
Rupee cost averaging is a strategy in which you buy more units when a fund's Net Asset Value (NAV) is low and less units when it is higher. Essentially, this SIP advantage assures that the cost of acquiring mutual fund units is averaged across the SIP's lifespan. 

3- Market fluctuation
In SIP investment, you don't need to worry about market fluctuations due to its rupee cost averaging benefits.

4- Minimum investment
In SIPs, you can start investment with just Rs 500. According to your capacity, you can increase this amount of investment.

5- Disciplined investor
Through SIP investment method, you can also become a disciplined investor because a regular fixed amount will be deducted from your account regularly. You also develop a habit of saving money and you can grow your money over a period of time.

Rs 4,700 monthly SIP for 35 years vs Rs 47,000 monthly SIP for 14 years

Now, let's discuss what will happen if you invest Rs 4,700 monthly for 35 years and Rs 47,000 monthly for 14 years. Which of these will give better returns and in which case, you will invest more money till maturity?

What will be the corpus from Rs 4,700 monthly SIP investment in 35 years?

In 35 years, you can accumulate Rs 3,05,27,765 by investing Rs 4,700 per month. The total investment will be Rs 19,74,000 and the total estimated returns will be Rs 2,85,53,765.

What will be the corpus from Rs 47,000 monthly SIP investment in 14 years?

In 14 years, you can accumulate Rs 2,05,11,644 by investing Rs 47,000 per month. The total investment will be Rs 78,96,000 and the total estimated returns will be Rs 1,26,15,644.

Conclusion

Here, we observe that at Rs 47,000 monthly investment for 14 years, the total investment amount is more than the amount invested in Rs 4,700 monthly SIP investment for 35 years, but the corpus built in the second instance is more than the first. This is due to the power of compounding.  

Investing in mutual funds is subject to market risks. Consult your advisor before making any investment.