12X30X12 Formula: Is it possible to build over Rs 1 crore retirement corpus with starting Rs 1,000 monthly SIP? Calculations may surprise you
12X30X12 Formula, SIP Investment: Retirement is a natural stage of life that comes for everyone, and while you can't avoid it (unless faced with a tragic situation), it's crucial to start saving for it as early as possible. Given the rising inflation, a retirement corpus of at least Rs 1 crore may provide some financial security after you retire. But how can you accumulate this amount? The answer lies in investing wisely, and one of the best options available today is Systematic Investment Plans (SIPs).
SIPs have gained popularity in recent years due to their simplicity, steady returns, and lower risk compared to investing directly in stocks. Many individuals, especially those with modest salaries, often feel that inflation eats up most of their income, leaving little room for savings. However, SIPs allow you to start investing with as little as Rs 500 a month, and they offer a relatively low-risk way to grow your money over time.
The real power of SIP lies in compounding — the longer you invest, the more your wealth grows exponentially. If you're looking to build a retirement corpus of around Rs 1 crore, the 12X30X12 formula can help you reach your goal. Here’s how you can achieve that, even if you start with as little as Rs 1,000 per month.
(Disclaimer: Our calculations are projections and not investment advice. Do your own due diligence or consult an expert for financial planning)
SIP Investment: Understanding the 12X30X12 Formula
The 12X30X12 formula is a powerful method for growing wealth through SIPs. Let’s break it down:
- First 12: Represents the annual top-up of 12 per cent. This means that every year, you increase your monthly SIP amount by 12 per cent.
- Second 30: Refers to the investment duration of 30 years. The longer you stay invested, the greater the compounding effect.
- Third 12: 12% Return - The expected average annual return on your SIP investment.
SIP Investment: How the 12X30X12 Formula Works
Let’s assume you begin with an SIP of Rs 1,000 per month. Here's how the formula would work over time:
12X30X12 Formula: Year 1
You start by investing Rs 1,000 each month. Over the year, your total contribution will be Rs 12,000.
12X30X12 Formula: Year 2
In the second year, you increase your monthly SIP by 12 per cent. Instead of Rs 1,000, your SIP now becomes Rs 1,120 per month. So, your total annual investment will be Rs 13,440.
12X30X12 Formula: Year 3
In the third year, you again increase your SIP by 12 per cent. Now, you’ll be investing Rs 1,254 per month, making your total contribution for the year Rs 15,048.
12X30X12 Formula: Process continues for 30 years
This process continues year after year, with your SIP amount increasing by 12 per cent annually. This steady increase in your SIP contributions, combined with the power of compounding, helps accelerate the growth of your investment over time.
Power of Long-Term Investment
As your income grows, it will become easier to maintain or even increase your SIP contributions.
12X30X12 Formula: Your Total Contribution Over 30 Years
By following this strategy for 30 years, your total investment will amount to Rs 28,95,992.
12X30X12 Formula: Expected Capital Gain At 12% Annual Return
Assuming an average annual return of 12 per cent, your expected capital gain after 30 years will be Rs 83,45,611.
12X30X12 Formula: Total Amount Received
Adding the two, your corpus will grow to approximately Rs 1,12,41,603 by the end of 30 years.
12X30X12 Formula: You Become A Crorepati By The Time You Retire
By starting with just Rs 1,000 per month, increasing your SIP by 12 per cent every year, and staying invested for 30 years, you could end up with a retirement corpus of over Rs 1 crore. This means that with disciplined investing, you could become a crorepati by the time you retire.