Power of Compounding: How much money to put in monthly SIP to build Rs 8 crore retirement corpus starting at age 25? Learn with examples and calculation
Systematic Investment Plans (SIPs) in mutual funds have gained significant popularity in India in recent years. This is mainly because investors can start SIPs with a small amount, and can create wealth for long-term goals, rupee-cost averaging, and disciplined investing.
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Sebi Chief Madhabi Puri Buch
Capital markets regulator Sebi Chief Madhabi Puri Buch on Monday (September 2) said soon investors will be able to start SIP with as low as Rs 250 per month.
SIP: Minimum investment amount
Currently, the minimum investment amount is Rs 500 per month.
SIP: Maximum investment amount
There is no maximum limit to invest in an SIP.
Lump-sum investment
SEBI requires mutual funds to offer a minimum investment value of Rs 100 for lump-sum investments.
Compounding interest
SIPs can let your money grow tremendously over time due to compounding interest.
Types of SIP
Top-up SIP
Flexible SIP
Perpetual SIP
SIP intervals
It can be daily, weekly, monthly, or yearly.
SIP calculator
A SIP calculator can help you define financial objectives, determine the amount you need to contribute, and track your progress.
SIP investment: Factors to consider before starting SIP investment
- Investment goals
- Scheme performance
- Risk appetite
- Expenses
Power of starting SIP early
It enables the individual to acquire a larger corpus over time owing to the power of compounding. This strategy also promotes disciplined investment because a certain amount is invested at regular periods. Furthermore, it can assist reduce the impact of market volatility by purchasing more units when prices are low and fewer units when prices are high. This method, known as rupee cost averaging, can be successful in the long run.
Have you started SIP investment already?
If you want to see the power of compounding interest, start investing as early as possible. But don't worry if you have started late, you can still accumulate a large corpus through a monthly SIP.
Invest this much in SIP to accumulate Rs 8 crore retirement corpus
If you start investing at 25-year age, then you have 30 years to invest till retirement.
Here's how to make corpus of Rs 8 crore at retirement:
Monthly SIP: Rs 12,320
Annual return: 12%
Duration: 35 years
Total investment in 30 years: Rs 51,74,400
Maturity amount: 8,00,21,715
Disclaimer: Investing in mutual funds is subject to market risks. Consult your advisor before making any investment.