Power of Compounding: How long it will take to build Rs 6 crore corpus with Rs 7,000, Rs 12,000 and Rs 15,000 monthly SIP investment
Let’s understand the power of compounding to build a retirement corpus of Rs 6 crore. Check, how long it will take to reach this goal by investing Rs 7,000, Rs 12,000, or Rs 15,000 monthly in a mutual fund systematic investment plan (SIP).
Building a large corpus like Rs 6 crore might seem like an uphill task, but the power of compounding can make it possible. An individual can reach this retirement corpus goal by consistently investing Rs 7,000, Rs 12,000, or Rs 15,000 in mutual fund SIP. In this article, we will explore the timeframe required for each investment amount to achieve the Rs 6 crore retirement corpus goal.
Photos source: Pixabay/Representational
(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 a process of earning returns not just on your initial investment but also on the returns accumulated over time. The longer you stay invested, the faster your wealth grows.
Understanding 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 investor’s investment capacity- daily, weekly, monthly, quarterly, half-yearly, or yearly.
Why choose SIP?
SIP is a disciplined approach to investing. It allows investors to invest small amounts regularly in mutual funds which can help them achieve their financial goals.
Benefits of compounding
Encourages long-term financial goal planning
Investors corpus can grow faster with time
Reduces risk
How long it will take for investors to reach Rs 6 crore retirement corpus with Rs 7,000 monthly SIP
Target corpus: Rs 6 crore
At 12 per cent return: Approximately 38 years.
How long it will take for investors to reach Rs 6 crore retirement corpus with Rs 12,000 monthly SIP
Target corpus: Rs 6 crore
At 12 per cent return: Approximately 33 years.
How long it will take for investors to reach Rs 6 crore retirement corpus with Rs 15,000 monthly SIP
Target corpus: Rs 6 crore
At 12 per cent return: Approximately 32 years.
From Rs 7,000 monthly SIP to Rs 6 crore corpus at 12 per cent annualised return
During this time, the investment will be Rs 31,92,000, estimated capital gains will be Rs 6,21,65,151 and the estimated retirement corpus will be Rs 6,53,57,151.
From Rs 12,000 monthly SIP to Rs 6 crore corpus
During this time, the investment will be Rs 47,52,000, the estimated capital gains will be Rs 5,63,75,977 and the estimated retirement corpus will be Rs 6,11,27,977.
From Rs 15,000 monthly SIP to Rs 6 crore corpus
The investment amount will be Rs 57,60,000, the estimated capital gains will be Rs 6,18,79,455 and the estimated retirement corpus will be Rs 6,76,39,455.