Magic of Compounding: Starting Rs 6,000 SIP at 25, 30, 35? Here’s how much funds you can accumulate at retirement
Magic of Compounding: 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.
The compound interest for a given amount is calculated using both the principal and the interest earned over time. This is main distinction between compound and simple interest.
Compounding interest
It allows investors to earn interest on their investments and reinvest the money, earning further income over time.
SIP Investment - weekly, monthly and quarterly
In SIP, investors should invest a fixed amount every week, month or quarterly for a long period to get compounding interest benefits.
Mutual fund SIP calculator
A mutual fund calculator can help you locate the best mutual funds and track their growth over time.
Short-term withdrawal in SIP
Withdrawing money from SIP in the short term will not provide you full benefits of compounding interest.
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.
How can SIP make you a disciplined investor?
Since your money gets automatically deducted, it makes you invest regularly.
Types of SIP
There are three types of SIPs:
Top-up SIP
Flexible SIP
Perpetual SIP
Starting SIP at 25?
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.
Investing Rs 6,000/month can give you this much at retirement
Suppose you start investing Rs 6,000 per month at 25 age and do this till 60. This way, you can accumulate Rs 3,89,71,614. This includes Rs 25,20,000 invested amount and estimated returns (12% per annum) of Rs 3,64,51,614 on your investment.
Investing Rs 6,000/month at 30
Suppose you start investing Rs 6,000 per month at 30 age and do this till 60. This way, you can accumulate Rs 2,11,79,483. This includes Rs 21,60,000 invested amount and estimated returns (12% per annum) of Rs 1,90,19,483 on your investment.
Investing Rs 6,000/month at 35
Suppose you start investing Rs 6,000 per month at 35 age and do this till 60. This way, you can accumulate Rs 1,13,85,811. This includes Rs 18,00,000 invested amount and estimated returns (12% per annum) of Rs 95,85,811 on your investment.
Disclaimer: Investing in mutual funds is subject to market risks. Consult your advisor before making any investment.