Rs 5,000 SIP for 40 years vs Rs 50,000 SIP for 20 years: Which can create higher corpus? See calculations to know it
Rupee cost averaging in SIP: SIPs allow you to purchase more units when the net asset value (NAV) is low and fewer units when the NAV is high.
SIP is a method of investing money in a regular and structured manner. Through SIP, the investors can save money for retirement by investing a small amount on a weekly, monthly, quarterly and yearly basis. SIPs also help investors to build a habit of savings and investing regularly. Take a look at the benefits of SIPs:
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How can SIP make you a disciplined investor?
Since your money gets automatically deducted, it makes you invest regularly.
Flexibility in SIP
However, SIP investment makes you a regular investor but if you are going through some financial issues, you can adjust the amount as per your budget.
What is the rupee cost averaging in SIP?
SIPs allow you to purchase more units when the net asset value (NAV) is low and fewer units when the NAV is high.
What are the types of SIP?
There are three types of SIPs:
Top-up SIP
Flexible SIP
Perpetual SIP
Starting SIP late?
Do you think, you are late to start an SIP investment? If yes, don't worry. A regular investment in SIP till your retirement age can still give you a huge amount in 25 years.
How much amount you can create at retirement if invest Rs 5,000 SIP for 40 years?
If a person invests Rs 5,000 per month for 40 years, then they can generate a corpus of Rs 5,94,12,101.
Calculations of generating Rs 5.94 crore corpus?
Invested amount: Rs 24,00,000
Estimated returns: 5,70,12,101
Maturity amount: 5,94,12,101
How much amount you can create at retirement if invest Rs 50,000 SIP for 20 years?
If a person invests Rs 50,000 per month for 40 years, then they can generate a corpus of Rs 4,99,57,396.
Calculations of generating Rs 4.99 crore corpus?
Invested amount: Rs 1,20,00,000
Estimated returns: 3,79,57,396
Maturity amount: 4,99,57,396
Conclusion
This means if you invest a smaller amount for more time then you can make a better corpus. This is the due to the power of compounding. In fist case, the invested amount in 40 years is 24 lakh while it is Rs 1.20 crore in 20 years. But the estimated returns are much better in first case.
Investing in mutual funds is subject to market risks. Consult your advisor before making any investment.