Power of Rs 3,800 SIP: Can you build Rs 4 crore corpus with Rs just 3,800 monthly investment?
Building Rs 4 crore with just Rs 3,500 monthly investment may sound like a dream but one can make this dream come true with the help of the power of compounding. The key to generating such a sizeable corpus is consistency and disciplined investment. Therefore, let’s understand how monthly investment in a systematic investment plan (SIP) can help achieve this target.
SIP is a popular investment option that helps investors build a sizeable retirement corpus. Even a small amount can do wonders. The key to generating a satisfactory corpus is starting early and staying consistent. The power of compounding plays an important role, it encourages people to create goals and then work on them to achieve them. Even if you start investing a small amount of Rs 3,800 in monthly SIP, you can end up creating a Rs 4 crore retirement corpus by the end of the investment period. Thus, let’s find out how can this happen with the help of calculations.
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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 systematic investment plan (SIP)
SIP is a process of investing a fixed amount in mutual fund(s). Investors can invest daily, weekly, monthly, quarterly, or yearly, depending on their choice.
Why choose SIP?
SIP is beginner-friendly, by investing even a small amount regularly, first-time investors can start their journey toward building a sizeable corpus.
Why investing early is beneficial?
Investing early gives you investment more time to grow in the long run. Let’s understand it with an example.
Early investment
Investor A: Starts investing ₹5,000/month at age 25 and continues till age 45 (20 years).
Total Investment: ₹12,00,000
Maturity Amount (at 12% annual return): ₹50,00,000
Investor B: Starts investing ₹5,000/month at age 35 and continues till age 55 (20 years).
Total Investment: ₹12,00,000
Maturity Amount (at 12% annual return): ₹28,00,00
SIP calculations
Target corpus: Rs 4 crore
Monthly investment: Rs 3,800
Annualised return: 12 per cent
How long it will take to create a corpus of Rs 4 crore corpus
It will approximately take 39 years to generate Rs 4 crore.
How much can Rs 3,800 SIP build in 10 years?
The investment amount will be Rs 4,56,000 the estimated capital gains will be Rs 4,26,888, and the estimated retirement corpus will be Rs 8,82,888.
How much can Rs 3,800 SIP build in 20 years?
The investment amount will be Rs 9,12,000, the estimated capital gains will be Rs 28,84,762, and the estimated retirement corpus will be Rs 37,96,762.
How much can Rs 3,800 SIP build in 30 years?
The investment amount will be Rs 13,68,000, the estimated capital gains will be Rs 1,20,45,672, and the estimated retirement corpus will be Rs 1,34,13,672.
How much can Rs 3,800 SIP build in 39 years?
The investment amount will be Rs 17,78,400, the estimated capital gains will be Rs 3,82,49,573, and the estimated retirement corpus will be Rs 4,00,27,973.