Power of Compounding: How soon will monthly SIP of Rs 6,650, Rs 9,550 and Rs 12,200 reach Rs 7 crore corpus target?
Starting with just Rs 6000 monthly investment and above to create a sizeable retirement corpus of Rs 7 crore may sound unreal and impractical. But one can generate this target corpus by staying disciplined and consistent in their investment. Let’s find out how soon will monthly SIP of Rs 6,650, Rs 9,550 and Rs 12,200 reach Rs 7 crore corpus target.
If you start investing early even with a small amount, in the long run, you will be able to generate a sizeable corpus. The key to generating a huge corpus starting with a little investment is consistency and a disciplined approach. Later the power of compounding works and helps grow your money in the long run. Here, we will understand the calculations of how investing monthly in a systematic investment plan (SIP) with just Rs 6,650, Rs 9,550 and Rs 12,200 can build a retirement corpus of Rs 7 crore. We will also focus on how long it will take to reach this target.
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(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)
Power of compounding
Compounding is a method through which earnings generated by investments are reinvested to generate additional earnings. One can take benefit of the power of compounding by staying consistent.
What is SIP?
A systematic investment plan is a process of investing in a mutual fund with a fixed amount, either daily, weekly, monthly, or yearly.
What are advantages of compounding?
It is suitable for long-term investors
It is flexible
It encourages the habit of saving at an early age
What are advantages of SIP?
It features flexible investment
It promotes long-term growth
It is convenient
Why investing early is beneficial?
Investing early can help one get more years for compound growth compared to an investor who begins their investment journey late.
SIP calculations
Target corpus: Rs 7 crore
Monthly investments: Rs 6,650, Rs 8,500, Rs 10,500
Annualised return: 12 per cent
How long it will take to generate Rs 7 crore with Rs 6,650 monthly SIP?
It will approximately take 39 years to achieve the target of Rs 7 crore.
From Rs 6,650 monthly SIP to Rs 7 crore at 12 per cent annualised return
The investment amount during that time will be Rs 31,12,200. The estimated capital gains will be Rs 6,69,36,752, and the estimated retirement corpus will be Rs 7,00,48,952.
How long it will take to generate Rs 7 crore with Rs 9,550 monthly SIP?
It will approximately take 36 years to achieve the target of Rs 7 crore.
From Rs 9,550 monthly SIP to Rs 7 crore
The investment amount during that period will be Rs 41,25,600. The estimated capital gains will be Rs 6,58,93,482, and the estimated retirement corpus will be Rs 7,00,19,082.
How long it will take to generate Rs 7 crore with Rs 12,200 monthly SIP?
It will approximately take 34 years to achieve the target of Rs 7 crore.
From Rs 12,200 monthly SIP to Rs 7 crore
The investment amount during that time period will be Rs 49,77,600. The estimated capital gains will be Rs 6,52,07,217, and the estimated retirement corpus will be Rs 7,01,84,817.