Power of Rs 5,500 SIP: How Rs 5,500 monthly step up SIP can create over Rs 10 crore retirement corpus, know here
Power of Rs 5,500 SIP: Small monthly investments can make a big impact if made for a long term. A Rs 5,500 monthly step up SIP investment can generate a corpus of Rs 10 crore if made consistently.
Power of Rs 5,500 SIP: Beginning from a monthly investment of Rs 5,500 to reach a retirement corpus of Rs 10 crore may appear to be surreal, but many things that look tough to get can be within reach if one makes a consistent effort. Similarly, a person making consistent investments for years can reach a substantial retirement corpus goal. The condition is to begin their retirement planning journey early and stick to it for a long time. With that, they get more years for compound growth of their investment compared to when they begin late. Know how a Rs 5,500 monthly step up SIP, boosting by 5 per cent yearly, can generate a Rs 10 crore corpus.
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Benefit of early investment
The one who begins their journey can reach a retirement corpus goal with much less monthly SIP investment amount compared to the one who starts late. Understand it through examples.
Rs 2,000 SIP vs Rs 8,000 SIP
We take here two monthly SIP investments. A invests Rs 2,000 in a monthly SIP and B invests Rs 8,000. A has an investment horizon of 35 years, while B can invest for a total of 23 years. Both expect an annualised return of 12 per cent. Let's who can generate a higher corpus.
Rs 2,000 SIP vs Rs 8,000 SIP
A's investment in 35 years will be Rs 8,40,000, estimated capital gains will be Rs 1,21,50,538, and the estimated corpus will be Rs 1,29,90,538.
Rs 2,000 SIP vs Rs 8,000 SIP
B's investment in 23 years will be Rs 22,08,000, estimated capital gains will be Rs 95,76,458, and the estimated corpus will be Rs 1,17,84,458.
Here, we see that A generated an estimated higher corpus of Rs 12,06,080, despite investing Rs 13,68,000 less.
Rs 2,000 vs Rs 20,000 SIP
Let's take it to another level, here we take examples of Rs 2,000 monthly SIP investment, and Rs 20,000 monthly SIP investment.
Rs 2,000 vs Rs 20,000 SIP
Here, A will invest Rs 2,000 for 39 years, and B will invest Rs 20,000 for 20 years. Both expect a 12 per cent annualised return each. Let's see who creates a higher corpus.
A's investment in 39 years will be Rs 9,36,000, estimated capital gains will be Rs 2,01,31,354, and the estimated corpus will be Rs 2,10,67,354.
Rs 2,000 vs Rs 20,000 SIP
B's investment in 20 years will be Rs 48,00,000, estimated capital gains will be Rs 1,51,82,958, and the estimated corpus will be Rs 1,99,82,958.
Here, A generated an extra retirement corpus of Rs 10,84,396 on investing Rs 38,64,000 less.
From Rs 5,500 step up SIP to Rs 10 crore corpus
We will take the example of Rs 5,500 monthly SIP investment. The annual SIP amount boost will be 5 per cent. Annualised return will be 12 per cent. Let's see the break-up of the investment and return.
Corpus from Rs 5,500 step up SIP in 10 years
In 10 years, the investment will be Rs 8,30,141, estimated capital gains will be Rs 7,02,677, and the estimated corpus will be Rs 15,32,818.
Corpus from Rs 5,500 step up SIP in 20 years
In 20 years, the total investment will be Rs 21,82,353, estimated capital gains will be Rs 53,73,340, and the estimated corpus will be Rs 75,55,693.
Corpus from Rs 5,500 step up SIP in 30 years
Investment in 30 years will be Rs 43,84,964, estimated capital gains will be Rs 2,46,18,769, and the estimated corpus will be Rs 2,90,03,733.
Corpus from Rs 5,500 step up SIP in 40 years
In 40 years, the total investment will be Rs 79,72,785, estimated capital gains will be Rs 9,43,75,507, and the estimated corpus will be Rs 10,23,48,292.
What are learnings
Compound growth works best in the long duration. The longer one invests, the faster their corpus can grow.
In first 10 years, the investor could generate Rs 15,32,818 on an investment of Rs 8,30,141.
From 10 to 20 years, the estimated corpus grew by Rs 60,22,875, on an investment of Rs 13,52,212.
From 20 to 30 years, the estimated corpus increased by Rs 2,14,48,040, on an extra investment of Rs 22,02,611. It grew even faster in the next 10 years.
What are learnings
From 30 years, the estimated corpus jumped by Rs 7,33,44,559 on an extra investment of Rs 35,87,821.
In the first 20 years, the corpus was Rs 90,88,511 on a total investment of Rs 30,12,494.
In the last 20 years, the corpus generated was Rs 93259781 on a total investment of Rs 1,23,57,749.