Power of Compounding: Want Rs 8.8 crore corpus in 20, 25, or 30 years? Know what should be your monthly SIP and lump sum investments for it
Power of Compounding: Financial planning is about setting a corpus goal and achieving it in a fixed duration. Important things that are needed to know are the investment amount, rate of return, and ways to revise the investment strategy to achieve the goal.
Power of Compounding: Starting to invest early can be the mantra to create a sizeable corpus. A Rs 1,000 monthly SIP can generate a Rs 1 crore corpus, and a Rs 10,000 monthly SIP investment can generate a Rs 10 crore corpus, provided the investor has the patience to keep investing for a long time. With a long-term investment horizon, one can create a large corpus even with a small monthly SIP or lump sum investment amount. The power of compounding can boost their investments by many times in the long term. Know how much you need to invest through monthly SIPs and lump sum to create a Rs 6 crore corpus in 20, 25, and 30 years.
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(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)
Power of compounding for retirement planning
Retirement planning requires a long-term investment horizon where one can start to invest early in their career. Even if they start with a small amount and increase their amount with a rise in their salary, they can create a huge corpus by the time they retire. Let's understand it with a few examples.
Rs 10 crore corpus from Rs 10,000 step up SIP investment
Suppose a 25-year-old starts a Rs 10,000 monthly SIP investment and aims at generating a Rs 10 crore corpus. The investor aims to step up their SIP amount by 5 per cent every year, they can create it in approximately 35 years with 12 per cent annualised growth.
Rs 10 crore corpus from Rs 10,000 step up SIP investment
In 35 years, their investment in that period will be Rs 1,08,38,437; estimated capital gains will be Rs 8,88,57,661, and the estimated corpus will be Rs 9,96,96,098.
Rs 10 crore corpus from Rs 15,500 monthly SIP investment
If an investor invests Rs 15,500 monthly through SIP for 35 years, they can create a Rs 10 crore corpus.
Rs 10 crore corpus from Rs 15,500 monthly SIP investment
In such a case, their investment in 35 years will be Rs 65,10,000, estimated capital gains will be Rs 9,41,66,671, and the estimated corpus will be Rs 10,06,76,671.
Rs 10 crore corpus from Rs 10 lakh lump, Rs 7,500 monthly SIP investment
In the third scenario, the investor invests a lump sum amount of Rs 10 lakh and starts a SIP of Rs 7,500. They can achieve the Rs 10 crore corpus goal in approximately 35 years at 12 per cent annualised growth.
Rs 10 crore corpus from Rs 10 lakh lump, Rs 7,500 monthly SIP investment
During that period, their Rs 10,00,000 lump investment will grow to an estimated Rs 52,799,620, and a Rs 3,150,000 overall SIP investment will swell to an estimated Rs 48,714,518.
Story calculations
In our story we will show what should be SIP and lump sum investments to create an Rs 8.8 crore corpus in 20, 25, and 30 years. The rate of annualised return in each case will be 12 per cent.
Monthly SIP investment required to create Rs 8.8 crore corpus in 20 years
The estimated monthly SIP amount to create an Rs 8.8 crore corpus will be Rs 88,080.
The invested amount in 20 years will be Rs 2,11,39,200; estimated capital gains will be Rs 6,68,65,749, and the estimated corpus will be Rs 8,80,04,949.
Lump sum investment required to create Rs 8.8 crore corpus in 20 years
The estimated lump sum investment to get this corpus in 20 years will be Rs 91,22,675.33.
Estimated long-term capital gains on this investment will be Rs 7,88,77,330.
Monthly SIP investment required to create Rs 8.8 crore corpus in 25 years
The monthly SIP investment amount to get an Rs 8.8 crore corpus will be Rs 46,375.
The total investment in 25 years will be Rs 7,40,90,327, and the estimated corpus will be Rs 8,80,02,827.
Lump sum investment required to create Rs 8.8 crore corpus in 25 years
The estimated lump sum investment to achieve this goal will be Rs 51,76,450.98.
Estimated long-term capital gains during that period will be Rs 8,28,23,549.
Monthly SIP investment required to create Rs 8.8 crore corpus in 30 years
The monthly SIP investment in this case will be Rs 24,930.
The total investment in 30 years will be Rs 89,74,800; estimated capital gains will be Rs 7,90,25,950, and the estimated corpus will be Rs 8,80,00,750.
Lump sum investment required to create Rs 8.8 crore corpus in 30 years
The estimated lump sum investment to achieve this it will be Rs 29,37,257.3.
Estimated long-term capital gains in such a condition will be Rs 8,50,62,763.