Rs 1,000 Monthly SIP for 40 Years vs Rs 10,000 Monthly SIP for 20 Years: Which can give you higher corpus in long term? Calculations inside
Compounding increases your investment returns over time. The initial deposits compound over time to form a considerable corpus. The longer you invest, the more you may profit from the power of compounding.
Retirement planning is one of the most important thing that one should start timely. It is important because once you reach your retirement age then you realise that you have not saved enough funds for retirement period. You can accumulate funds through mutual fund SIPs too. Saving funds for your retirement means you don't need to worry about rising medical costs, pension, personal expenses and others.
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Mutual fund SIP investment
In this article, we will compare how a small amount of Rs 1,000 per month investment for 40 years can get you better returns than a bigger amount of Rs 10,000 monthly investment for 20 years. Take a look:
What is SIP?
SIP (Systematic investment plan) is a disciplined way of investment in which you invest a fixed amount regularly in mutual funds. The payment can be made weekly, monthly or quarterly or yearly.
Compound interest benefits in SIP
In SIP, there is a benefit of compounding interest. This means you get the interest on both the principal amount and the interest that has accumulated from previous periods.
Short-term withdrawal in SIP
If you want to take the full benefit of compounding, you should avoid withdrawing the amount before maturity.
How does compounding impact investment returns?
Compounding increases your investment returns over time. The initial deposits compound over time to form a considerable corpus. The longer you invest, the more you may profit from the power of compounding.
SIP: Flexibility
If you are going through some financial issues, you can adjust the amount too as per your budget.
SIP calculations
This article will comparison two monthly SIP investments- Rs 1,000 monthly for 40 years and Rs 10,000 monthly for 20 years. The annualised return in each case will be 12 per cent. Let's see which one gives higher returns.
What will be the corpus from Rs 1,000 monthly SIP investment in 40 years?
In 40 years, you can accumulate Rs 1,18,82,420 by investing Rs 1,000 per month.
Calculations of Rs 1.2 crore corpus
Total investment in 40 years: Rs 4,80,000
Estimated returns: Rs 1,14,02,420
Maturity amount: Rs 1,18,82,420
What will be the corpus from Rs 10,000 monthly SIP investment in 20 years?
In 20 years, you can accumulate Rs 99,91,479 by investing Rs 10,000 per month.
Calculations of Rs crore corpus
Total investment in 40 years: Rs 24,00,000
Estimated returns: Rs 75,91,479
Maturity amount: Rs 99,91,479
Investing in mutual funds is subject to market risks. Consult your advisor before making any investment.