A systematic investment plan (SIP) is a popular investment option that allows investors to build a sizeable retirement corpus. Even a small amount can make a big difference. The key to generating a satisfactory corpus is starting early and staying consistent. The power of compounding plays an important role, it encourages people to create goals and then work on them to achieve them. Even if you start investing a small amount of Rs 3,800 in monthly SIP, you can end up creating a Rs 4 crore retirement corpus by the end of the investment period. Thus, let’s find out how can this happen with the help of calculations. 

What is a systematic investment plan (SIP)?

SIP is a process of investing a fixed amount in mutual fund(s). Investors can invest daily, weekly, monthly, quarterly, or yearly, depending on their choice.

Why opt for SIP?

SIP is beginner-friendly, by investing even a small amount regularly, first-time investors can start their journey toward building a sizeable corpus.

Why investing early is beneficial?

Investing early gives you investment more time to grow in the long run. Let’s understand it with an example. 

SIP calculations

• Target corpus: Rs 4 crore
• Monthly investment: Rs 3,800
• Annualised return: 12 per cent

How long it will take to create a corpus of Rs 4 crore corpus

It will approximately take 39 years to generate Rs 4 crore.

What will be your retirement corpus in 10 years with Rs 3,800 monthly SIP?

The investment amount will be Rs 4,56,000 the estimated capital gains will be Rs 4,26,888, and the estimated retirement corpus will be Rs 8,82,888. 

What will be your retirement corpus in 20 years with Rs 3,800 monthly SIP?

The investment amount will be Rs 9,12,000, the estimated capital gains will be Rs 28,84,762, and the estimated retirement corpus will be Rs 37,96,762.

What will be your retirement corpus in 30 years with Rs 3,800 monthly SIP?

The investment amount will be Rs 13,68,000, the estimated capital gains will be Rs 1,20,45,672, and the estimated retirement corpus will be Rs 1,34,13,672.

What will be your retirement corpus in 39 years with Rs 3,800 monthly SIP?

The investment amount will be Rs 17,78,400, the estimated capital gains will be Rs 3,82,49,573, and the estimated retirement corpus will be Rs 4,00,27,973.

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