Power of Compounding: With Rs 6,000, Rs 10,000, Rs 15,000 monthly SIP, how long will it take to build Rs 6 crore corpus?
Let’s find out how the power of compounding can help individuals build Rs 6 crore corpus with monthly investments of Rs 6,000, Rs 10,000, or Rs 15,000.
The power of compounding is a game changer in wealth creation. It can turn small, and consistent investments into good savings over time. For individuals aiming to build Rs 6 crore corpus, understanding the role of disciplined monthly investments and compounding is important. With Rs 6,000, Rs 10,000, or Rs 15,000 monthly systematic investment plan (SIP), the time required to achieve this retirement corpus varies. Therefore, in this article, we will explore how compounding can help grow growth, and we will also focus on the calculations of the time needed for each investment amount.
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(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)
What is compounding?
Compounding is the process through which an investment generates earnings that are reinvested to generate additional earnings in the following periods. Simply it means, that the amount 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 can be done - daily, weekly, monthly, quarterly, half-yearly, or yearly.
Start early
Time is your greatest helper when it comes to compounding. By starting early you give your investments more time to grow and multiply.
Benefits of compounding
Encourages long-term financial goal planning
Investors savings can grow faster
Reduces risk
Power of Compounding: Calculations
Here, we will do the calculations on 12 per cent annualised returns on monthly SIP of Rs 6,000, Rs 10,000, or Rs 15,000.
From Rs 6,000 monthly SIP to Rs 6 crore corpus at 12 per cent annualised return
The estimated retirement corpus will be Rs 6,32,02,062. During this time, the invested amount will be Rs 28,08,000, and the estimated capital gains will be Rs 6,03,94,062.
How long will it take to achieve the target of Rs 6 crore with Rs 6,000 monthly SIP?
It will take approximately 39 years to achieve the target of Rs 6 crore retirement corpus. Thus, if you start investing at the age of 20, by the time you reach 59 you may achieve this target by that time.
From Rs 10,000 monthly SIP to Rs 6 crore corpus at 12 per cent annualised return
The estimated retirement corpus will be Rs 6,49,52,691. During this time, the invested amount will be Rs 42,00,000, and the estimated capital gains will be Rs 6,07,52,691.
How long will it take to achieve the target of Rs 6 crore with Rs 10,000 monthly SIP?
It will take approximately 35 years to achieve the target of Rs 6 crore retirement corpus. Thus, if you start investing at the age of 25, by the time you reach 60 you may achieve this target by that time.
From Rs 15,000 monthly SIP to Rs 6 crore corpus at 12 per cent annualised return
The estimated retirement corpus will be Rs 6,76,39,455. During this time, the invested amount will be Rs 57,60,000, and the estimated capital gains will be Rs 6,18,79,455.
How long will it take to achieve the target of Rs 6 crore with Rs 15,000 monthly SIP?
It will take approximately 32 years to achieve the target of Rs 6 crore retirement corpus.
Thus, if you start investing at the age of 28, by the time you reach 60 you may achieve this target by that time.