Power of Compounding: How long will it take to generate a corpus of Rs 4 crore, starting with just Rs 5,000 in a monthly SIP? See Calculations
Power of Compounding, Retirement Planning: As an investor, if your goal is to build a significant financial corpus for future needs, SIP (Systematic Investment Plan) investments can be an excellent choice. By making regular, disciplined contributions, you can benefit from the power of compounding and grow your wealth steadily.
(Disclaimer: Our calculations are projections and not investment advice. Do your own due diligence or consult an expert for financial planning)
Mutual Fund SIP
With the right mutual fund schemes, SIPs can help you achieve your financial objectives—whether it’s retirement planning, purchasing a home, or funding your children’s education.
Time Plays Key Role
Even with a small monthly investment, people can build a significant corpus over time with SIP, but they need to stay committed. Duration plays a key role in investments—the longer you invest, the more you benefit from compounding. Starting early allows your money to grow exponentially over time.
Step-Up SIP: Accelerating Your Wealth Creation
For those looking to achieve their financial goals sooner, the Step-Up SIP option can be particularly effective. By gradually increasing your SIP amount each year, you can potentially double your estimated corpus over time.
Let's know-how: Calculations
Consider starting with a monthly SIP of Rs 5,000 and increasing it by 10 per cent each year. Now, here are full calculations on how this investment grows over 25, 30, and 35 years, assuming an annualised return of 12 per cent:
Corpus from Rs 5,000 monthly SIP investment in 25 years (at 12% return, 10% step up every year)
The invested amount in 25 years will be Rs 59,00,824. Estimated capital gains will be Rs 1,54,76,907, and the estimated corpus will be Rs 2,13,77,731.
Also Read: Power of Strategic Investment: Want to create Rs 5 cr corpus in 25 years? Know what should be your monthly SIP?
Corpus from Rs 5,000 monthly SIP investment in 30 years (at 12% return, 10% step up every year)
The invested amount in 30 years will be Rs 98,69,641. Estimated capital gains will be Rs 3,43,00,976, and the estimated corpus will be Rs 4,41,70,618.
Corpus from Rs 5,000 monthly SIP investment in 35 years (at 12% return, 10% step up every year)
The invested amount in 35 years will be Rs 1,62,61,462. Estimated capital gains will be Rs 7,25,73,236, and the estimated corpus will be Rs 8,88,34,698.
Investing in Mutual Funds through SIP
Investing in mutual funds via SIP is less risky than directly buying stocks. With an average return of between 12 per cent to 15 per cent, equity mutual fund SIPs outperform most government schemes.
SIP vs Lump-sum
Unlike traditional lump-sum investments, SIPs allow you to invest a fixed amount regularly, regardless of market conditions.
Benefits of SIP
Flexibility: Adjust investments according to your budget
Power of Compounding: Grow your money significantly
Disciplined Investing: Automatic deductions