Power of Compounding: How Rs 10,000 monthly SIP investment for 4 extra years can take your corpus from 1.89 cr to Rs 3.12 cr
SIP Investment: When the market is up or down, rupee cost averaging helps SIP investors average their investments.
If a SIP investment is started early, it can give you decent returns. Increasing the period can unexpectedly boost your corpus growth. However, it is never too late to start any investment. SIP investment not only helps you in finance protection in your retirement period but also helps you to become a disciplined investor.
Investing in SIPs
In this article, we will talk about how extra years of investment can increase your corpus highly. But before that, let's understand what is an SIP, its benefits, and other things.
SIP meaning
SIP or systematic investment plan is a type of investment in mutual funds in which you invest an amount every week, month, quarter, or year.
Benefits of doing SIP
There are many benefits of a SIP investment. Let's take a look at a few:
Auto debit
If you set up an auto-debit option then you don't need to worry about the date of SIP as your money from your bank account will automatically be deducted.
Fixed amount SIP starting from Rs 100
You can start a SIP from as low as Rs 100 and invest at regular intervals.
Rupee cost averaging
When the market is up or down, rupee cost averaging helps SIP investors average their investments.
SIP makes you a disciplined investor
Through SIP, one can become a disciplined investor as you will have to invest a fixed amount at the same intervals.
Disadvantages of SIPs
As everything has its pros and cons, so do SIPs. Let's take a look at a few:
Market risk
Since SIPs invest in mutual funds, which further invest in stock markets, this is subject to market fluctuations.
Returns: Entry and exit time
The entry and exit time in the market can affect overall returns.
Locking
In SIP, you may need to lock your money for three years.
How Rs 10,000 monthly SIP investment for 4 extra years can take your corpus from 1.89 cr to Rs 3.12 cr?
Suppose you start investing Rs 10,000 per month in a SIP and you invest regularly for 25 years. Then your total investment would be Rs 30,00,000 (Rs 30 lakh) in 25 years. On an estimated annual return of 12 per cent, your returns would be Rs 1,59,76,351 (Rs 1.59 crore) and the maturity amount would be Rs 1,89,76,351 (Rs 1.89 crore).
Now, what if you increase your investment time to 4 more years?
Increasing time in SIP investments can make a huge difference. For example, if you keep investing the same Rs 10,000 for four more years, then your maturity amount will be Rs 3,12,12,516 (Rs 3.12 crore).
Calculations of accumulating Rs 3.12 crore corpus
Total investment in 29 years: 34,80,000 (Rs 34.8 lakh)
Estimated returns: 2,77,32,516 (Rs 2.77 crore)
Expected returns: 12 per cent
Maturity amount: 3,12,12,516 (Rs 3.12 crore)
Investing in mutual funds is subject to market risks. Consult your advisor before making any investment.