Power of Compounding: Can you get Rs 3 crore corpus with Rs 3,000, Rs 5,000 and Rs 6,000 monthly investments?
Some people may find it difficult to believe that small monthly SIP investments of Rs 3,000 to Rs 6,000 can generate a corpus of Rs 3 crore. One should not underestimate the power of small investments as compound growth can spring them to greater heights. Therefore, let’s find out how monthly investments of Rs 3,000, Rs 5,000, or Rs 6,000 can create a sizeable corpus of Rs 3 crore.
One should start investing early even if the investment amount is not much. The key to generating a large corpus even with a small investment amount is consistency and a disciplined approach. Later the power of compounding works and helps grow your money in the long run. Here, we will understand how investing monthly in a systematic investment plan (SIP) with just Rs 3,000, Rs 5,000 or Rs 6,000 can generate a retirement corpus of Rs 3 crore.
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(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)
Understanding compounding effects
Compounding is the process through which investments generate earnings that are reinvested to generate additional earnings. You can take benefit of the power of compounding by staying consistent. The sooner you start investing, the better it is. Starting early gives you more time to see the benefits of compounding.
What are the benefits of compounding?
Suitable for long-term investors
Flexibility
Encourages habit of saving at an early age
Why should one start investing early?
Investing early can help you get more years for compound growth compared to an investor who begins their investment journey late. If one starts investing early even with a small amount, their corpus has more time to grow in the long run.
What is systematic investment plan (SIP)?
SIP is a process of investing in a mutual fund with a fixed amount, either daily, weekly, monthly, or yearly.
Benefits of SIP?
Flexible Investment
Long term growth
Convenient
SIP calculation conditions
Target corpus: Rs 3 crore
Monthly investments: Rs 3,000, Rs 5,000, Rs 6,000
Annualised return: 12 per cent
How long it will take to generate Rs 3 crore with Rs 3,000 monthly SIP?
It will approximately take 39 years to achieve the target of Rs 3 crore.
From Rs 3,000 monthly SIP to Rs 3 crore at 12 per cent annualised return
The investment amount during that time will be Rs 14,04,000. The estimated capital gains will be Rs 3,01,97,031, and the estimated retirement corpus will be Rs 3,16,01,031.
How long it will take to generate Rs 3 crore with Rs 5,000 monthly SIP?
It will approximately take 35 years to achieve the target of Rs 3 crore.
From Rs 5,000 monthly SIP to Rs 3 crore
The investment amount during that period will be Rs 21,00,000. The estimated capital gains will be Rs 3,03,76,345, and the estimated retirement corpus will be Rs 3,24,76,345.
How long it will take to generate Rs 3 crore with Rs 6,000 monthly SIP?
It will approximately take 33 years to achieve the target of Rs 3 crore.
From Rs 6,000 monthly SIP to Rs 3 crore
The investment amount during that time period will be Rs 23,76,000. The estimated capital gains will be Rs 2,81,87,989, and the estimated retirement corpus will be Rs 3,05,63,989.