Power of Rs 2,500 SIP: Can one achieve Rs 3 crore corpus goal with just Rs 2,500 monthly investment? See details to know
Impact of Rs 2,500 monthly SIP: Small beginning, big impact can be clearly felt in the real of compounding. One who stays in their performing investments for the long term emerges the winner compared to someone who invests a higher amount but quits the race earlier.
Magic of Rs 2,500 monthly SIP: A small monthly investment for a long time or a large amount for a small period? Which of the two will you select to generate a larger corpus? To put it more precisely, a Rs 2,000 monthly SIP investment for 30 years or Rs 10,000 monthly investment for 15 years and 12 per cent annualised return on each? Where do you think you can make more money? To the surprise of many, a Rs 2,000 monthly investment can generate a Rs 20 lakh higher amount despite having less than half investment compared to Rs 10,000 monthly SIP. This happens because of compounding.
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How compounding accumulates wealth
Time is the winner. The one who stays in their investment for a long time gets more compounding on their returns. Hence, they can generate a higher corpus against someone who starts investing with a large amount but stops it early.
Examples: Rs 3,000 monthly SIP vs Rs 30,000 monthly SIP
A invests Rs 3,000 monthly in a mutual fund SIP for 40 years, while B invests Rs 30,000 monthly in a SIP for 20 years. Each get 12 per cent annualised return on their investments.
A will invest Rs 14,40,000, but their estimated capital gains will be Rs 3,42,07,261 and the estimated corpus will be Rs 3,56,47,261.
Examples: Rs 3,000 monthly SIP vs Rs 30,000 monthly SIP
B will invest Rs 72,00,000, their estimated capital gains will be estimated Rs 2,27,74,438, and the estimated corpus will be Rs 2,99,74,438.
So, we see that despite having 1/5ths of investment, a Rs 3,000 monthly SIP investment can estimated returns of over Rs 57 lakh.
Compounding for retirement corpus
B will invest Rs 72,00,000, their estimated capital gains will be Rs 2,27,74,438, and the estimated corpus will be Rs 2,99,74,438.
So, we see that despite having 1/5ths of investment, a Rs 3,000 monthly SIP investment can give extra return of over Rs 57 lakh.
Compounding for retirement corpus
A 20-year-old is aiming for a Rs 6 crore corpus at 60 years of age, while a 40-year-old is also expecting the same amount. Both are expecting 12 per cent annualised return during their investment period.
Compounding for retirement corpus
A needs to have estimated Rs 5,100 monthly SIP investment to achieve the goal.
The estimated capital gains will be Rs 5,81,52,343, while the estimated corpus will be Rs 6,06,00,343.
Compounding for retirement corpus
B needs to have Rs 60,500 monthly SIP investment to achieve the same goal.
Estimated capital gains will be Rs 4,59,28,449, while the estimated corpus during 20 years will be Rs 6,04,48,449.
Power of Rs 2,500 monthly SIP: Corpus in 10 years
In each case, we will take 12 per cent annualised return.
In 10 years, the invested amount will be Rs 3,00,000, estimated capital gains will be Rs 2,80,848, and the estimated corpus will be Rs 5,80,848.
Power of Rs 2,500 monthly SIP: Corpus in 20 years
In 20 years, the invested amount will be Rs 6,00,000, estimated capital gains will be Rs 18,97,870, and the estimated corpus will be Rs 24,97,870.
Power of Rs 2,500 monthly SIP: Corpus in 30 years
In 30 years, the invested amount will be Rs 9,00,000, estimated capital gains will be Rs 79,24,784, and the estimated corpus will be Rs 88,24,784.
Power of Rs 2,500 monthly SIP: Corpus in 40 years
In 40 years, the invested amount will be Rs 12,00,000, estimated capital gains will be Rs 2,85,06,051, and the estimated corpus will be Rs 2,97,06,051.