20X12X20 SIP Formula: Can you guess how long it may take your Rs 20,000 monthly SIP to build a Rs 2 crore corpus?
SIP Investment: Are you looking to build substantial savings for your dream house, dream car, children’s education, or retirement? If any of these goals resonate with you, then investing in a Mutual Fund SIP is an excellent long-term option. There are many reasons why, and one of the key benefits is that it allows investors to contribute a fixed amount regularly—whether monthly or quarterly.
With an SIP, anyone can invest, from a middle-class person to a high-salary employee. The true power of a Systematic Investment Plan lies in compounding—the longer you invest, the more your wealth grows exponentially.
If you’re looking to invest in SIPs, the formula 20X12X20 can help you accumulate a corpus of around ₹2 crore in just 20 years.
(Disclaimer: Our calculations are projections and not investment advice. Do your own due diligence or consult an expert for financial planning)
20X12X20 SIP Formula
The formula of mutual fund investments through SIP (Systematic Investment Plan) - 20X12X20 - is an investment strategy that will help a person to build over Rs 1.99 crore in just 20 years. Let's know-how -
SIP Investment: How does the 20X12X20 formula of SIP work?
In the formula - the first "20" represents a monthly SIP of Rs 20,000, "12" denotes the anticipated returns, with an average SIP return considered to be 12 per cent, and the last "20" signifies the number of years, implying that you need to invest in SIP for 20 years.
Why 12% return?
In today’s market, SIP (Systematic Investment Plan) Mutual Funds are one of the most effective ways to beat inflation. Despite being market-linked, their average return over the long term is typically around 12 per cent, sometimes even higher. This means that with the power of compounding, you can grow your money significantly over time. Even small investments can turn you into a millionaire in the long run.
20X12X20 SIP Formula: Calculating average investment
Applying this formula, if you start a monthly SIP of Rs 20,000 and continue it for 20 years, then you will invest a total of Rs 48,00,000 in 20 years.
20X12X20 SIP Formula: Calculating average capital gain
Calculating the average expected return of SIP at 12 per cent, a total of Rs 1,51,82,958 will be received as a capital gain on this amount in 20 years.
20X12X20 SIP Formula: Calculation to create a corpus of around Rs 2 crore
Consequently, at the end of 20 years, including the principal investment and capital gain, you will get a total of Rs 1,99,82,958 (around Rs 2 crore).
20X12X20 SIP Formula: Continue for 1 more year
If you continue for just one more year (a total of 21 years), your fund could grow to Rs 2,27,73,484 at the same 12 per cent return rate.
20X12X20 SIP Formula: For people earning Rs 1 lakh a month
If you earn Rs 1 lakh per month, investing Rs 20,000 (which is 20% of your income) in an SIP every month is entirely manageable. Financial experts recommend that everyone invest at least 20 per cent of their income for a secure future.
20X12X20 SIP Formula: Important Note -
While SIPs are a market-linked scheme and do not guarantee fixed returns, this calculation assumes an average 12 per cent return over the long term. If the return exceeds 12 per cent, your profit will be even higher, and if it’s slightly lower, your returns will be reduced accordingly.
Benefits of SIP
The key advantage of SIPs is that they carry lower risk compared to direct stock investments, and the benefits of compounding and rupee cost averaging help reduce the potential for loss. Therefore, the risk remains lower, making SIPs a safer, long-term investment strategy.