Imagine building a massive retirement fund of Rs 21 crore by investing just Rs 18,000 every month. Sounds too good to be true? But with a smart investment strategy, it’s achievable. In this article, we will explore how monthly investment in a Systematic Investment Plan (SIP) can grow your wealth over time with the help of the power of compounding. We will understand it with simple calculations and find out how long it will take to generate Rs 21 crore with Rs 18,000 monthly SIP.
What is SIP?
A systematic investment plan is a method of investing a fixed amount in mutual funds. Investors can invest daily, weekly, monthly, quarterly, or yearly, depending on their choice.
Why choose SIP?
SIP is beginner-friendly, by investing even a small of Rs 100 regularly, first-time investors can start their journey toward building a sizeable corpus. It is also convenient, with automated deductions you don’t have to worry about missing out on investment.
Why should one start investing early?
To get maximum returns from investment in the long run one should start investing early. Let’s understand it through an example.
Start early
Investor A: Starts investing Rs 5,000/month at age 25 and continues till age 45 (20 years).
Total Investment: Rs 12,00,000
Maturity Amount (at 12% annual return): Rs 50,00,000
Investor B: Starts investing Rs 5,000/month at age 35 and continues till age 55 (20 years).
Total Investment: Rs 12,00,000
Maturity Amount (at 12% annual return): Rs 28,00,000
By starting 10 years earlier, Investor A earns ₹22,00,000 more, showcasing the power of compounding.
SIP calculations
Target corpus: Rs 21 crore
Monthly investment: Rs 18,000
Annualised return: 12 per cent
How long it will take to create a corpus of Rs 21 crore
It will approximately take 40 years to generate Rs 21 crore.
How much can Rs 18,000 monthly SIP build in 10 years?
The investment amount will be Rs 21,60,000, the capital gains will be Rs 20,22,103, and the estimated retirement corpus will be Rs 41,82,103.
How much can Rs 18,000 monthly SIP build in 20 years?
The investment amount will be Rs 43,20,000, the capital gains will be Rs 1,36,64,663, and the estimated retirement corpus will be Rs 1,79,84,663.
How much can Rs 18,000 monthly SIP build in 30 years?
The investment amount will be Rs 64,80,000, the capital gains will be Rs 5,70,58,448, and the estimated retirement corpus will be Rs 6,35,38,448.
How much can Rs 18,000 monthly SIP build in 40 years?
The investment amount will be Rs 86,40,000, the capital gains will be Rs 20,52,43,564, and the estimated retirement corpus will be Rs 21,38,83,564.
(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)
