Retirement Planning: A Rs 5,000, Rs 15,000, or Rs 50,000 monthly SIP investment may fall short if one doesn’t give sufficient time to grow their investments.

The key to creating a large corpus is to start investing early in one’s life, where a small amount invested consistently and for a long time can help create wealth worth crores.

Such a corpus can help one achieve many of their financial goals.

If one gets an above-average return of 15 per cent in their mutual fund investments, in the long term, their Rs 15,000 monthly step up SIP investment can generate a Rs 12 crore corpus.

But how this strategy may work out; can mutual funds give a 15 per cent annualised return in the long run, and how many years it may take to generate a Rs 12 crore corpus if one starts investing Rs 15,000 today and increases their investment amount by 5 per cent every year.

What is SIP investment in mutual fund?

A systematic investment plan (SIP) is a method to invest in mutual funds, where one can invest a fixed amount every investment cycle, such as daily, weekly, monthly, quarterly, half-yearly, or yearly.

When you invest through SIP in a mutual fund, the fund house issues you net asset value (NAV) units of the same amount.

Since the NAV price changes everyday, you buy SIPs at different rates every investment cycle.

What is step up SIP?

It is to increase your SIP amount every six months or a year. Investors can increase the SIP amount with a rise in their income.

How much return one may get in SIP investment

It may depend on the type of fund one is investing in.

The long-term return in equity mutual funds may be 12 per cent, in hybrid funds, the average annualised return may be 10 per cent, while in debt, it may be 8 per cent.

However, you may find many funds in each category, which have given returns much higher than these ranges.

Is 15% long-term annualised return possible in SIP?

If we see the live 10-year data of equity funds, here are some funds that have given over 15 per cent annualised return in a decade.

Nippon India Small Cap Direct Plan

Quant Small Cap Direct Plan

SBI Small Cap Direct Plan

Motilal Oswal Mid Cap Direct Plan

Edelweiss Mid Cap Direct Plan

Quant ELSS Tax Saver Direct Plan

Mirae Asset Large & Midcap Direct

This is the performance of 10 years at a time when the share market’s performance has been off-colour for last nearly 1 year. The funds can also give a 15 per cent annualised return in the longer period.  

From Rs 15,000 monthly SIP to 12 crore corpus

If one invests Rs 15,000 monthly in an SIP, increases their investment by 5 per cent annually, and gets a 15 per cent annualised return, they can reach the Rs 12 crore corpus in an estimated 30 years.

Let’s see how this investment will grow in phases. 

Corpus from Rs 15,000 monthly step up SIP in 10 years

In 10 years, the total investment will be Rs 22,64,021, estimated capital gains will be Rs 24,31,866, and the estimated corpus will be Rs 46,95,886.

Corpus from Rs 15,000 monthly step up SIP in 20 years

In 20 years, the total investment will be Rs 59,51,872, estimated capital gains will be Rs 2,06,94,711, and the estimated corpus will be Rs 2,66,46,583.

Corpus from Rs 15,000 monthly step up SIP in 30 years

In 30 years, the total investment will be Rs 1,19,58,993, estimated capital gains will be Rs 10,83,00,882, and the estimated corpus will be Rs 12,02,59,874.