How your child may have over Rs 1.13 crore corpus by 21 years of age if you invest Rs 10,000 monthly in SIP
Crorepati Formula: Looking to build a corpus of over Rs 1.1 crore for your child's future? Know how systematic investment plans (SIPs) can help you accumulate a substantial amount by investing just Rs 10,000 per month over 21 years. Understand the potential returns, risks, and the impact of varying annualised return rates (12% to 15%) on your accumulated corpus.
Crorepati Formula: With the rising inflation, are you also worried about your new-born child's future expenses? Do you feel that while you can afford expenses such as your child's basic education through your salaried income, you may need more money for their higher education? If yes, then instead of worrying, you can start investing for their future from the birth of the child. Starting investing early can give you an edge over a late starter, and by the time your child turns 21, you can create over Rs 1 crore corpus for them with modest monthly Systematic Investment Plan (SIP) investment in a mutual fund scheme(s). This investment approach requires discipline and consistency, but over time, it can help you accumulate a substantial corpus for your child's future.
(Disclaimer: This is not investment advice. Calculations are projections. Please do your own due diligence or consult an advisor for retirement planning.)
Want to build over Rs 1.1 crore for your child through SIP?
Here, we have the target of building a corpus of over Rs 1.1 crore for the child's future in a fixed period of 21 years. In this case, how much money do you need to invest every month in SIP if your rates of annualised returns are 12 per cent, 13 per cent, 14 per cent, and 15 per cent? Know through calculations-
Monthly SIP investment for Rs 1.13 cr corpus at 12% annualised return
To accumulate a corpus of Rs 1.13 crore, assuming average annualised return rate of 12 per cent, you need to invest Rs 10,000 monthly for 21 years.
Monthly SIP investment for Rs 1.13 cr corpus at 12% annualised return
According to SIP calculation, you will invest a total of Rs 25,20,000 i.e., Rs 10,000 per month for 21 years.
Monthly SIP investment for Rs 1.13 cr corpus at 12% annualised return
Assuming the average SIP return to be 12 per cent, a total of Rs 88,66,742 will be received as a capital gain on the amount in 21 years.
Build Rs 1.13 crore corpus for Child's future: Total amount received
Consequently, at the end of 21 years, including the principal investment and capital gain, you will get a total of Rs 1,13,86,742.
Calculation for Rs 1.3 crore corpus
Total Investment Amount: Rs 25,20,000
Estimated Capital Gains: Rs 88,66,742
Total Approx. Return: Rs 1,13,86,742
SIP: Understanding risks
It’s important to know that SIP is a market-linked scheme, so returns are not guaranteed. The 12 per cent annualised return mentioned above is an estimate, and actual returns may vary depending on market conditions.
Corpus if you get 13% annualised SIP return
For example, if your investments yield 13 per cent annuaised return, your estimated corpus will be Rs 1,31,65,175 in 21 years.
Corpus if you get 14% annualised SIP return
Another example, if your investments yield a 14 per cent return, your estimated corpus can be Rs 1,52,58,822 in 21 years.
Corpus if you get 15% annualised SIP return
Similarly, if your investments yield a 15 per cent return, your total corpus can be Rs 1,77,26,727 in 21 years.
Benefits of SIP
Despite the market risks, SIP is often considered a good option for wealth creation because it benefits from rupee cost averaging, which helps mitigate losses. However, keep in mind the inherent risks of investing in SIP and plan accordingly.