Power of Rs 5,000 SIP: Is Rs 5 crore corpus possible with Rs 5,000 monthly investment? Understand calculations
Who would have thought that even a small amount of Rs 5,000 can create Rs 5 crore retirement corpus? One should not underestimate the power of small sums, they can bring a big difference. For example, if one invests Rs 5,000 in a monthly systematic investment plan (SIP), they may generate Rs 5 crore corpus in the long run. Therefore, let’s understand how you can work towards achieving this target corpus along with the calculations.
Generating a sizeable corpus requires patience and consistency. Even a small amount like Rs 5,000 can do wonders, they can help you create Rs 5 crore corpus. It may sound unreal but with disciplined and consistent investment one can achieve this target with the help of the power of compounding. It lets your money grow in the long run. The earlier you start, the sooner you can reach your financial goals. In this article, we’ll explore how long it will take to build a corpus of Rs 5 crore with Rs 5,000 monthly SIP.
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(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)
What is systematic investment plan?
SIP is a process of investing a fixed amount in a mutual fund regularly. It could be daily, weekly, monthly, half-yearly or yearly.
Understanding power of compounding
Compounding is a way through which investments generate earnings that are reinvested to generate additional earnings. The sooner you start investing, the better it is. Starting early gives you more time to see the benefits of compounding.
Early investment
Starting early reduces the pressure to invest large sums later and helps you achieve big financial goals like building a sizeable corpus more comfortably.
What are benefits of SIP?
It is a flexible investment
It promotes long term growth
It is convenient
SIP calculations
Target corpus: Rs 5 crore
Monthly investments: Rs 5,000
Annualised return: 12 per cent
How long it will take to create corpus of Rs 5 crore with Rs 5,000 monthly SIP
It will approximately take 39 years to generate Rs 5 crore.
How much can Rs 5,000 SIP build in 10 years?
In 10 years, the invested amount will be Rs 6,00,000, the capital gains will be Rs 5,61,695, and the estimated retirement corpus will be Rs 11,61,695.
How much can Rs 5,000 SIP build in 20 years?
In 20 years, the invested amount will be Rs 12,00,000, the capital gains will be Rs 37,95,740, and the estimated retirement corpus will be Rs 49,95,740.
How much can Rs 5,000 SIP build in 30 years?
In 30 years, the invested amount will be Rs 18,00,000, the capital gains will be Rs 1,58,49,569, and the estimated retirement corpus will be Rs 1,76,49,569.
How much can Rs 5,000 SIP build in 39 years?
The investment amount will be Rs 23,40,000, the capital gains will be Rs 5,03,28,385, and the estimated retirement corpus will be Rs 5,26,68,385.