Retirement Planning: How Rs 10,000 monthly SIP investment can generate Rs 1.90 cr, Rs 2.28 cr, and Rs 2.73 cr corpus; know here
Power of Compounding: Mutual fund SIP investment in the short term may not make a significant impact, but in the long term, it can create magical results because of compounding growth of investments.
Power of Compounding: Have a low monthly income, where you hardly save money to make investments? Don't think much about starting investing. Find an investment scheme that allows a small monthly contribution. The reason is that a small amount for monthly investment may appear to be negligible, but if it is made for a long time, it can produce magical results. Investment in mutual funds through systematic investment plan (SIP) is one such way of creating a sizeable corpus through small monthly contributions, where the power of compounding creates surprising results. E.g., a Rs 500 monthly SIP investment may not appear to be much, but if one gets 12 per cent annualised return on that, in 30 years, the estimated corpus will be Rs 17,64,957, and in 40 years, it will be Rs 59,41,210.
In this write-up, we will tell how a Rs 10,000 monthly SIP can generate estimated corpuses of Rs 1.90 crore, 2.28 crore, and Rs 2.73 crore under different conditions.
Photos: Unsplash/Pixabay
SIP investment conditions
The monthly investment will be Rs 10,000. It will remain the same throughout the investment period.
SIP investment period
The SIP investment period will be 25 years.
Annualised SIP returns
Annualised returns will be 12 per cent, 13 per cent, and 14 per cent. These kinds of returns are possible in equity mutual funds.
How Rs 10,000 monthly SIP can create Rs 1.90 crore corpus
If one gets 12 per cent annualised growth for 20 years, they can create approximately Rs 1.90 crore corpus.
How Rs 10,000 monthly SIP can create Rs 1.90 crore corpus
Their investment in 20 years will be Rs 30,00,000, estimated capital gains will be Rs 1,59,76,351, and the estimated amount will be Rs 1,89,76,351.
How Rs 10,000 monthly SIP can create Rs 2.28 crore corpus
At 13 per cent annualised growth of the investment, one can achieve an estimated corpus of Rs 2.28 crore.
How Rs 10,000 monthly SIP can create Rs 2.28 crore corpus
In 25 years, estimated capital gains will be Rs 1,97,14,350, and the estimated corpus will be Rs 2,27,14,350.
How Rs 10,000 monthly SIP can create Rs 2.73 crore corpus
If one gets 14 per cent annualised return on their Rs 10,000 monthly SIP investment, they can create an estimated corpus of Rs 2.73 crore.
How Rs 10,000 monthly SIP can create Rs 2.73 crore corpus
Estimated capital gains in that period will be Rs 2,42,72,777, and the estimated return will be Rs 2,72,72,777.
How compounding works
In the 3 examples above, the investment duration is the same, but the difference of 1 per cent annualised growth balloons to many lakhs in the long term. It happens because compounding makes a stark difference in the long term.