20X20X20 SIP Formula: The 20X20X20 formula denotes a Rs 20,000 monthly SIP investment for 20 years and a 20 per cent annualised return. In a practical world, it may look tough to get those kinds of returns, but not impossible. If one follows the strategy, they may get outstanding results, creating a corpus of nearly Rs 5 crore on an investment of just Rs 48 lakh. Know how it may work out for you. Before that let’s know how SIP returns grow over time.

SIP investment is convenient to make

Systematic Investment Plan (SIP) is a method to invest in a mutual fund scheme where an investor can invest a fixed amount periodically such as daily, weekly, monthly, quarterly, half-yearly, or yearly. An SIP can be started in a mutual fund scheme with as little an amount as Rs 100.

Step up SIP

It’s an SIP where you can increase your investment amount as your income rises. You can raise a fixed percentage amount such as 5 per cent or 10 per cent every six months or a year. 

Long-term SIP investment 

The investment duration plays a key role in growing your corpus in an SIP investment.

The longer period leads to fast growth of investments because of compound growth.

Let’s see an example.

A person starts a Rs 5,000 monthly SIP and wants to do it for 40 years. Let’s see what kind of returns they may get every 10 years at an annualised return rate of 12 per cent. 

In 10 years, their investment will be Rs 6,00,000, estimated capital gains will be Rs 5,20,179, and the estimated corpus will be Rs 11,20,179.

In 20 years, their investment will be Rs 12,00,000, estimated capital gains will be Rs 33,99,287, and the estimated corpus will be Rs 45,99,287.

In 30 years, their investment will be Rs 18,00,000, estimated capital gains will be Rs 1,36,04,866, and the estimated corpus will be Rs 1,54,04,866.

In 40 years, their investment will be Rs 24,00,000, estimated capital gains will be Rs 4,65,65,355, and the estimated corpus will be Rs 4,89,65,355.

SIP investment for retirement corpus building

SIP investment can be an important part of retirement corpus building. One can start an SIP investment and increase their investment with a rise in their income.

If a person starts with a Rs 10,000 monthly SIP investment and increases their investment by 5 per cent every year.

Let’s see how much corpus they may generate in 35 years at a 12 per cent annualised return.

In 35 years, the total investment will be Rs 1,08,38,437, estimated capital gains will be Rs 7,53,96,711, and the estimated corpus will be Rs 8,62,35,148.

How 20X20X20 SIP formula can generate near-Rs 5 crore corpus

In this method, an investor needs to invest Rs 20,000 a month in an SIP, they need to make it for 20 years and get a 20 per cent annualised return. Let’s see the corpus they may generate in 35 years.

In 35 years, the total investment will be Rs 48,00,000, estimated capital gains will be Rs 4,47,23,880, and the estimated corpus will be Rs 4,95,23,880.

Is 20% long-term return possible in mutual fund?

Not in most mutual funds, but there are mutual funds such as Nippon India Growth Fund, Franklin India Prima Fund, HDFC ELSS Tax Saver Fund, and HDFC Flexi Cap Fund are some of the funds that have completed at least 20 years and have given over or near-20 per cent annualised return.