Power of Compounding: How long will it take to build Rs 1 crore corpus with Rs 1,000, Rs 3,000, and Rs 5,000 monthly SIP
If you have started earning recently, start investing even if your earnings are not much. Even a minimum amount of Rs 1,000 monthly investment can do wonders. It can help investors build a retirement corpus of Rs 1 crore. Yes, you heard that right, check out how long will it take to build a large estimated Corpus of Rs 1 crore through a monthly Systematic Investment Plan (SIP) of Rs 1,0000, Rs 3,000, and Rs 5,000.
One should never underestimate the power of saving and investing, irrespective of the fact that their earnings are not satisfactory. Even a small investment can help you become wealthy. In this context, today we will discuss how long will it take for an investor to build Rs 1 crore retirement corpus with a monthly mutual fund SIP of Rs 1,000, Rs 3,000 and Rs 5,000.
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(Disclaimer: Our calculations are projections and not investment advice. Do your own due diligence or consult an expert for financial planning)
Power of compounding
You must be aware of compound interest, as it was introduced to students in their school. As a student, you were asked to find the rate of interest, principal amount, and period. But who knew all these terms would play a vital role in helping investor grow their money over time? Well, the power of compounding is the process of earning interest on interest, that is the amount of money you invest will generate earnings from both the principal amount and the accrued earnings of compounding periods.
Introduction to SIP
SIP stands for a Systematic investment plan that allows the investors to invest a fixed amount in a mutual fund scheme at regular intervals. The investment in SIP can be done according to the choice of the investor’s investment capacity- daily, weekly, monthly, quarterly, half-yearly, or yearly.
Early investment
Starting investing early can be more advantageous for investors than starting it late. They can not only review their investment strategy many times but they can also contribute enough time to let their corpus grow. The strategy can help them meet their financial goals on time.
Benefits of compounding
Encourages long-term financial goal planning
Investors savings can grow faster
Reduces risk
Follow disciplined approach
A disciplined investment with a consistent contribution can help investors create a large retirement corpus with the effect of the power of compounding.
From Rs 1,000 monthly SIP to Rs 1 crore corpus at 12 per cent annualised return
It will take approximately 39 years to achieve the target of Rs 1 crore retirement corpus. During that time, the investment will be Rs 4,68,000, estimated capital gains will be Rs 1,00,65,677 and the estimated retirement corpus will be Rs 1,05,33,677.
From Rs 3,000 monthly SIP to Rs 1 crore corpus
It will approximately take 30 years to achieve the target of Rs 1 crore corpus. During that time, the investment will be Rs 10,80,000, the estimated capital gains will be Rs 95,09,741 and the estimated retirement corpus will be Rs 1,05,89,741.
From Rs 5,000 monthly SIP to Rs 1 crore corpus
It will take approximately 26 years to achieve the target of Rs 1 crore corpus. During that time, the investment will be Rs 15,60,000, the estimated capital gains will be Rs 91,95,560 and the estimated retirement corpus will be Rs 1,07,55,560.