Magic of Compounding: Turning Rs 10,000 monthly investment into Rs 1 crore
Let’s find out how investing Rs 10,000 monthly can turn into Rs 1 crore through the magic of compounding. Learn how small, consistent investments can grow in the long run to build a satisfactory corpus.
Imagine investing just Rs 10,000 every month and turning it into Rs 1 crore over time. It sounds incredible, but it’s possible with the magic of compounding. Compounding means your earnings start generating their own earnings. When you invest consistently, your money grows faster as the returns on your investment start to earn more returns. In this article, we’ll show you how small, regular investments can add during your investment years and help you build a large retirement corpus. Even with a small investment can do wonders. Let’s explore how.
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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 the power of compounding
The power of compounding is an investment to generate earnings not only on the original principal amount but also on the accrued earnings. The greater the number of compounding periods, the greater the compound interest growth.
What is a Systematic Investment Plan (SIP)
In SIP, investors can invest a fixed amount in a mutual fund scheme at regular intervals. The investment in SIP can be done daily, weekly, monthly, quarterly, or half-yearly, yearly.
Benefits of compounding
Your savings can grow faster
Long-term growth
Reduces risk
Why choose SIP?
Affordable
Convenient
Flexible
Starting early is the key
Every financial journey begins with a single step. Even the smallest investments can grow to a huge amount to help you meet your financial goals.
Power of Compounding: Calculation condition
Target corpus: 1 crore
Monthly investment: Rs 10,000
Annualised return: 12 per cent
Here’s a simple breakdown of how a monthly investment of Rs 10,000 can grow into Rs 1 crore over time using the power of compounding, assuming an average annualised return of 12 per cent
How soon one can achieve the target of Rs 1 crore corpus with Rs 10,000 monthly investment?
It will approximately take 20 years to achieve the target corpus of Rs 1 crore. If one starts investing Rs 10,000 in monthly SIP at the age of 25, till the time they turn 45 years old, they can reach this corpus goal.
How much will be the corpus in the first 10 years?
The estimated corpus will be Rs 23,23,391. During that time, the amount invested be will around Rs 12,00,000, and the estimated capital gains will be Rs 11,23,391.
How much will be corpus in 20 years?
The estimated corpus will be Rs 99,91,479. During that time, the amount invested be will around Rs 24,00,000, and the estimated capital gains will be Rs 75,91,479.
Step-up SIP: How many years it will take to build Rs 1 crore corpus through step-up SIP
Target corpus: Rs 1 crore
Annual step up: 5 per cent
Annualised rate of return: 12 per cent
Monthly investment amount: Rs 10,000
It will approximately take 18 years to reach the goal of Rs 1 crore corpus with step-up SIP.