SIP For Retirement Planning: Want to create Rs 6 crore corpus in 20, 25, or 30 years? Know what should be your daily, monthly, and yearly SIP investments
Retirement Planning via SIP: Investment for retirement can be done through a number of ways. A Systematic Investment Plan (SIP) in mutual fund(s) is one of them. It provides compound growth to investors, who can create a sizeable retirement corpus through consistent, long-term investing.
Retirement Planning via SIP: Mutual fund investors can invest through a systematic investment plan (SIP) and lump sum. While in a lump sum investment, they can invest one time; SIP allows them to invest periodically. They can invest in daily, weekly, monthly, quarterly, half-yearly, or annual SIPs depending on their income cycle and financial goals. They can invest in a monthly SIP with as low an amount as Rs 100, while many fund houses allow a lower amount than that for a daily SIP. The SIP investment is often used as a source of retirement planning, where investors can invest a small amount periodically and create a sizeable corpus in the long run. Know how one can create a large retirement corpus from a small monthly SIP investment, and what can be the daily, monthly, and yearly SIP investments to create a Rs 6 crore corpus in 20, 25, and 30 years.
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(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)
From Rs 2,000 monthly SIP to Rs 2 crore corpus
An investor can create an estimated Rs 2,10,67,354 corpus from a Rs 2,000 monthly SIP investment in approximately 39 years if they get a 12 per cent annualised SIP return (XIRR). But it can be a much larger corpus if the rate of return is 1 per cent higher.
At a 13 per cent annualised return, the estimated corpus will be Rs 2,87,18,792.
From Rs 5,000 monthly SIP to Rs 8 crore corpus
If an investor gets a 13 per cent annualised SIP return from a Rs 5,000 monthly investment, they can generate an estimated Rs 8,17,71,694 corpus in 40 years.
Even if the rate of annualised return is 10 per cent, the estimated corpus will be Rs 3,18,83,901.
From Rs 5,000 monthly SIP to Rs 8 crore corpus
Both these examples show how a small amount can generate a large corpus because of years of compound growth on investments.
Retirement corpus calculations
For our story, we will calculate the required daily, monthly, and yearly SIP investment amounts required to create a Rs 6 crore corpus in 20, 25, and 30 years. We will take a 12 per cent annualised return for our calculations.
Daily SIP amount required to create Rs 6 cr corpus in 20 years
The estimated daily SIP investment will be Rs 1,968.25. Total investment in 20 years will be Rs 1,43,68,213.
Monthly SIP amount required to create Rs 6 cr corpus in 20 years
The estimated monthly SIP investment during that period will be Rs 60,051.17, and the total investment will be Rs 1,44,12,280.
Yearly SIP amount required to create Rs 6 cr corpus in 20 years
The estimated yearly SIP investment will be Rs 7,43,506.07, and the overall investment will be Rs 1,48,70,121.
Daily SIP amount required to create Rs 6 cr corpus in 25 years
The estimated daily SIP investment will be Rs 1,033.76, while the overall estimated investment will be Rs 94,33,019.
Monthly SIP amount required to create Rs 6 cr corpus in 25 years
The estimated monthly SIP investment will be Rs 31,618.3, while the overall investment will be Rs 94,85,491.
Yearly SIP amount required to create Rs 6 cr corpus in 25 years
The estimated yearly SIP investment will be Rs 40,17,84.1, and the overall investment in 25 years will be Rs 1,00,44,602.
Daily SIP amount required to create Rs 6 cr corpus in 30 years
The estimated daily SIP investment will be Rs 554.28, and the overall investment will be Rs 60,69,413.
Monthly SIP amount required to create Rs 6 cr corpus in 30 years
In this case, the estimated monthly investment will be Rs 16,997.58, and the overall investment will be Rs 61,19,130.
Yearly SIP amount required to create Rs 6 cr corpus in 30 years
The estimated yearly SIP investment will be Rs 2,21,981.65, and the overall investment will be Rs 66,59,450.
What are learnings?
The estimated investment is decreasing as the duration is increasing. E.g., the required monthly SIP investment to get a Rs 6 crore corpus in 20 years is Rs 60,051.17, and the overall is Rs 1,44,12,280. But the estimated amounts reduce to Rs 16,997.58 and Rs 61,19,130, respectively, when the investment horizon is increased to 30 years. It happens because of the extra years of compound growth in investments.