Unleashing the Power of Compounding: How your Rs 8,333 monthly SIP can grow to Rs 1.59 cr, Rs 2.95 cr, and Rs 5.43 cr; know here
Unleash the Power of Compounding: Starting with a small monthly investment to create a large corpus shows the true power of compounding. In the realm of compounding, duration of investment matters a lot. Those who stick to their investments for a long time are likely to be the winners in the race to a large retirement corpus.
Unleash the Power of Compounding: Everyone wants to live a happy post retirement life. For that, they need a substantial amount that not only can help them beat inflation but can also help them bear lifelong expenses. For that, proper planning and early investing are important. One who starts early can get the benefit of compounding. Because the longer the duration, the larger the corpus.
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How compounding works
When you invest monthly or lump sum for the long term and get returns on it, the retirement corpus increases. The process continues for years and years. But in investment schemes, where you get compound returns or interest, you get returns on the entire corpus and not just on the principal amount. When you get returns for a long duration, the corpus grows faster.
How compounding helps grow retirement corpus
Take the example: if a person invests Rs 5,000 for 10, 20, and 30 years and gets 12 per cent annualised return on that, their investment in those years will be Rs 6,00,000, 12,00,000, and 18,00,000, respectively, but their estimated corpus in that duration will be Rs 11,61,695, Rs 49,95,740, and Rs 1,76,49,569, respectively.
How time plays a role in compounding
How time plays a role in compounding
SIP investment condition
For our calculations, we will take the example of Rs 8,333 monthly mutual fund SIP investment, or Rs 1 lakh a year, where the investor will get 12 per cent annualised return on their investment. We will take 3 investment durations to show how the retirement corpus will grow faster with time due to compounding returns.