Power of Compounding: 5X15X25; in how many years your Rs 5,000 monthly SIP can grow to Rs 1.6 crore; see calculations to see growth
Investors can build a corpus of Rs 1.6 crore by investing Rs 5,000 in a monthly systematic investment plan (SIP). But the question is how long will your investment take to grow to such a huge amount? Let’s find out.
There are various types of investment schemes that an investor can invest in. Among them, one of the most popular strategies for building a large retirement corpus is through a mutual fund systematic investment plan (SIP). It allows investors to invest a fixed amount regularly, such as daily, weekly, monthly, or yearly. Here, we will understand the power of the 5X15X25 mutual fund SIP investment strategy that can help investors create a Rs 1.6 crore corpus through a Rs 5,000 monthly SIP.
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(Disclaimer: Our calculations are projections and not investment advice. Do your own due diligence or consult an expert for financial planning)
Power of Compounding
The power of compounding works by multiplying your wealth over time. It is a type of interest/growth that generates earnings not only on the original principal amount but also on the accumulated interest over time.
Power of compounding in SIP
SIP and the power of compounding go hand in hand and investment in mutual fund schemes via SIP can work wonders. Through SIP, investors can invest a fixed amount at regular intervals such as daily, weekly, monthly, or yearly. The returns earned on mutual fund SIP growth funds are reinvested back into the fund, allowing the investors to get the advantage of compounding effects.
Benefits of SIP
The longer the SIP duration, the greater the compounding benefits. With an average annualised return of 12 per cent in equity mutual funds, (annualised rate of return may differ) SIPs offer substantial growth, exceeding returns of many investment schemes.
Benefits of compounding
Your savings can grow faster
Long-term growth
Reduces risk
Provides flexibility
SIP offers flexible investment options, allowing you to choose the investment amount and period. The investment cycle can be daily, weekly, monthly, and yearly.
5X15X25 formula: How many years will it take to build a Rs 1.6 crore corpus
It will approximately take 25 years to build a corpus of Rs 1.6 crore. See calculations to know how it will work.
SIP investment: What is 5X15X25 formula?
5: Monthly SIP amount of Rs 5,000
15: annualised SIP returns
25: the number of years to invest
5X15X25 SIP formula: Calculation to create corpus of Rs 1.6 crore
If investors start investing Rs 5,000 in monthly SIP using the formula 5X15X25. This means investing Rs 5,000 for 25 years with 15 per cent annualised SIP returns will help them build an estimated corpus of Rs 1,64,20,369.
5X15X25 SIP formula: Total investment
If investors invest Rs 5,000 for 25 years, their total investment will be Rs 15,00,000.
5X15X25 SIP formula: total capital gains
With Rs 5,000 monthly SIP for 25 years of investment period. The estimated capital gains will be Rs 1,49,20,369.