SIP investment: A financially stable future is a dream shared by almost everyone. And to turn this dream into reality, people often invest their money while managing day-to-day expenses. Some prefer to invest in guaranteed return options like fixed deposits or government schemes, while other aims to build a larger corpus by investing in the stock market or mutual funds. If you also want to generate a substantial corpus for the future and are comfortable taking some risk, then SIP investment may help you to reach your goals.

What is SIP?

SIP, or Systematic Investment Plan, is a market-linked, long-term investment that allows investors to invest a fixed amount periodically in mutual funds instead of lump sums to generate a corpus.

How does SIP help to generate a substantial corpus?

SIP uses the power of compounding to generate interest on interest. That means you will generate earnings not only on the original principal amount, but also on the accumulated interest earned over time.

Still confused, how does it work? Let’s understand with an example –

Suppose you are investing Rs 5,000 monthly in a SIP mutual fund. Assuming an average return rate of 12 per cent, your target is to generate over Rs 1 crore corpus in the long term. Now, can you guess how much time you need to invest in SIP? Let’s calculate and find – 

So, how much time will it take to generate an over Rs 1.08 crore corpus with a Rs 5,000 monthly SIP?  

According to the calculations, you will need to invest in SIP for at least 27 years to generate over Rs 1.08 crore corpus with a Rs 5,000 monthly investment.

Generate Rs 1.08 crore with Rs 5,000 monthly SIP: Calculating total investment

In 27 years, you will invest a total of Rs 16,20,000.

Generate Rs 1.08 crore with Rs 5,000 monthly SIP: Calculating average capital gain

In terms of capital gain, a total of Rs 91,91,565 corpus will be received. It should be noted that this is an expected return, and the actual amount may vary depending on the market conditions. 

Generate Rs 1.08 crore with Rs 5,000 monthly SIP: Final Corpus Received 

Consequently, at the end of 27 years, including the principal investment and capital gain, you will get a total of Rs 1,08,11,565.

Full Calculation: You may become the owner of over Rs 1.08 crore after 27 years

• Total Investment Amount: Rs 16,20,000
• Capital Gains: Rs 91,91,565
• Total Approx. Return: Rs 1,08,11,565

(Disclaimer: Our calculations are projections and not investment advice. Do your own due diligence or consult an expert for financial planning.)