Small Savings, Big Impact: With just Rs 500 monthly SIP, guess the corpus you can expect by age 58 at 12% return | Power of Compounding
Starting early gives your investments the longest time to grow. For example, if you start investing just Rs 500 in a monthly systematic investment plan (SIP)at the age of 18. By the time you reach 58, you may have a large amount of retirement corpus to enjoy financial freedom. Small savings can turn into a huge amount later. Let’s understand it in detail.
Ever wondered how small savings can turn into a big corpus? That’s the magic of compounding. By starting a Systematic Investment Plan (SIP) of just Rs 500 per month at the age of 18 and continuing it until 58, you can build impressive financial support post retirement. With an expected annualised return of 12 per cent, your small monthly investment has the potential to grow into a large corpus over 40 years. This simple yet powerful habit proves that even small amounts, when invested consistently, can do wonders. Let’s find out what will be your retirement corpus by investing just Rs 500 monthly in a Systematic Investment Plan (SIP) from age 18 to 58.
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(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)
Small savings, big impact: Power of compounding
Compounding has the potential to transform small savings into a large corpus with disciplined and consistent investment. It works by reinvesting your returns, allowing your investments to grow over time.
Why Start SIP at 18?
Starting early gives your investments the longest possible time to grow. At 18, you’re at the perfect stage to take advantage of compounding. Even a small SIP of Rs 500 per month, with an expected annualised return of 12 per cent, can grow into a large corpus by the time you turn 58.
Small investment, big dreams
Rs 500 monthly SIP may seem like a small amount, but over time, it can help build a satisfactory retirement corpus. Starting early with just Rs 500 can be affordable for most people, especially students or young professionals.
Benefits of starting early
The earlier you start, the longer your investments have to multiply.
Regular SIPs develop the habit of saving and investing.
Investing small amounts may minimise the financial burden.
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.
Power of Compounding: Calculations
Monthly SIP Amount: Rs 500
Investment Period: 40 years (18 to 58)
Expected Annual Return: 12 per cent
What will be your corpus in 10 years with Rs 5,00 SIP at 12 per cent annualised return?
In 10 years, the estimated corpus will be Rs 1,16,170. During this time, the estimated invested amount will be Rs 60,000 and the estimated capital gains will be Rs 56,170.
What will be your corpus in 20 years with Rs 5,00 SIP at 12 per cent annualised return?
In 20 years, the estimated corpus will be Rs 4,99,574. During this time, the estimated invested amount will be Rs 1,20,000 and the estimated capital gains will be Rs 3,79,574.
What will be your corpus in 30 years with Rs 5,00 SIP at 12 per cent annualised return?
In 30 years, the estimated corpus will be Rs 17,64,957. During this time, the estimated invested amount will be Rs 1,80,000 and the estimated capital gains will be Rs 15,84,957.
What will be your corpus in 40 years with Rs 5,00 SIP at 12 per cent annualised return?
The power of compounding will be more clear in 40 years. The estimated retirement corpus will be Rs 59,41,210. During this time, the estimated invested amount will be Rs 2,40,000 and the estimated capital gains will be Rs 57,01,210.
What will be your retirement corpus with just Rs 500 monthly SIP, by age 58
If you start investing at age 18, by the time you turn 58, the estimated retirement corpus will be around 60 lakhs.
How long did it take to achieve this target with just Rs 500 monthly SIP
It will approximately take 40 years to reach the expected target. By starting Rs 500 monthly SIP at 18 and letting it grow for 40 years, you can build a satisfactory retirement corpus.