Power of Compounding: Monthly savings Rs 3,000; here's how you can generate Rs 1.58 crore fund through step up SIP
Find out how investing Rs 3,000 monthly in a step up SIP can grow your wealth to an estimated Rs 1.58 crore. Discover the power of compounding and a structured investment tactic.
Investing early can help you take advantage of compounding, the longer you invest without withdrawing your capital gains, the higher the corpus you can grow. Keeping that in mind, today we will explain to you how you can generate an estimated amount of Rs 1.58 crore through step up SIP. You just need to invest Rs 3,000 monthly and see your wealth grow through the power of compounding.
What is SIP
SIP (Systematic Investment Plan) is a flexible option for investors to invest a fixed amount regularly, primarily in mutual funds that helps investors build wealth over time. It comes with various benefits that allow investors to invest a predetermined sum at a set interval.
What is mutual fund
A mutual fund is an investment that involves numerous investors investing money in equity, bonds, debt funds, hybrid funds, and other market instruments. It is run by professional money managers who decide which security to buy (stocks, bonds, etc.) and when to sell them.
Understanding step up SIP
A step up SIP also known as top up SIP allows investors to increase the SIP amount periodically after the chosen time period (either 6 months or 12 months). Investors must choose the step up option when they begin the SIP because once you start a normal SIP, it can not be converted into a step up SIP.
Benefits of step up SIP
You can start with a fixed monthly investment and gradually raise your contribution as your income rises. A step up SIP set up in such a way will help maximise your return. It also benefits the investors by maintaining a balance between inflation and purchasing power.
How is regular SIP different from step up SIP?
The regular SIP has a fixed investment amount whereas, a step up SIP allows investors to increase their investment amount periodically.
How Rs 3,000 monthly step up SIP can generate Rs 1.58 crore fund
A monthly SIP of Rs 3,000 with a 5% step up each year can take around 30 years to generate an estimated capital of Rs 1.58 crore. The invested amount in 30 years will be Rs 23,91,799, estimated long-term capital gains Rs 1,34,28,419, and the estimated corpus will be Rs 1,58,20,218.
Corpus in 10 years starting with Rs 3,000 monthly step up SIP
A step up SIP started with a Rs 3,000 monthly investment can generate an estimated corpus of Rs 8.36 lakhs in around 10 years with an annualised return of 12 per cent. The invested amount in 10 years will be Rs 4,52,804, long-term capital gains Rs 3,83,279, and the estimated corpus will be Rs 8,36,083.
Corpus in 20 years starting with Rs 3,000 monthly step up SIP
A step up SIP started with a Rs 3,000 monthly investment can generate an estimated corpus of Rs 41.21 lakhs in around 20 years. The invested amount in 20 years will be Rs 11,90,374, estimated long-term capital gains Rs 29,30,913, and the estimated corpus will be Rs 41,21,287.
Corpus in 30 years starting with Rs 3,000 monthly step up SIP
A step up SIP started with a Rs 3,000 monthly investment can generate an estimated corpus of Rs 1.58 crore in around 30 years. The invested amount in 30 years will be Rs 23,91,799, estimated long-term capital gains Rs 1,34,28,419, and the estimated corpus will be Rs 1,58,20,218.
What if you go for a simple Rs 3,000 monthly SIP for 30 years
A monthly SIP of Rs 3,000 can generate an estimated corpus of Rs 92.4 lakhs in around 30 years with an annualised return of 12 per cent. The invested amount in 30 years will be Rs 10,80,000, estimated long-term capital gains Rs 81,62,920, and the estimated corpus will be Rs 92,42, 920.
(Disclaimer: Our calculations are projections and not investment advice. Do you own due diligence or consult an expert for financial planning)