Power of Compounding: How to build Rs 1 crore retirement corpus with SIPs of Rs 2,000, Rs 3,000, and Rs 6,000

One of the most effective ways to build a significant corpus is through a Mutual Funds SIP (Systematic Investment Plan). Despite being linked to market performance, SIPs offer excellent long-term returns, surpassing most other investment options.

If you start retirement planning at the beginning of your career, say at age 25, you have ample time to save. However, if you are already 35, you only have 25 years left to save until you turn 60. So, how much should you invest in a SIP to become a millionaire, depending on whether you are 25, 30, or 35 years old?

With 25 years until retirement, you should start an SIP of at least Rs 6,000 per month. Over 25 years, you will invest Rs 18,00,000, and at an average return of 12 per cent, you will earn Rs 95,85,811 in interest. By age 60, your total corpus will be Rs 1,13,85,811.

If you have 30 years until retirement, you can start a SIP of Rs 3,000 per month. Over 30 years, your total investment will be Rs 10,80,000. At a 12 per cent return, you’ll earn Rs 95,09,741 in interest, giving you a total of Rs 1,05,89,741 by age 60.

With 35 years to save, a SIP of just Rs 2,000 per month can make you a millionaire. You will invest Rs 8,40,000 over 35 years, and with 12 per cent returns, you’ll earn Rs 1,21,50,538 in interest. By the time you turn 60, you’ll have Rs 1,29,90,538, far exceeding a crore.

Investing in mutual funds via SIP is less risky than directly buying stocks. With an average return of around 12 per cent, SIPs outperform most government schemes. 

The power of compounding makes your money grow rapidly over time, making long-term SIPs an excellent strategy for wealth creation.