Here’s an example to help you figure out how you can benefit from compounding by starting early and staying consistent. Suppose you and your friend start investing. You started investing Rs 5,000/month at age 25 and continued till age 45 (20 years).
Total Investment: Rs 12,00,000
Maturity Amount (at 12 per cent annual return): Estimated Rs 45,99,287
Your friend started investing Rs 5,000/month at age 35 and continues till age 45 (10 years).
Total Investment: Rs 12,00,000
Maturity Amount (at 12 per cent annual return): Estimated Rs 11,20,179
By starting 10 years earlier, you may earn Rs 34,79,108 more, showcasing the power of compounding. On that note, let’s find out how fast you can accumulate Rs 5,00,00,000 corpus with just Rs 8,000 monthly investment.
What is SIP?
A systematic investment plan that allows investors to invest a fixed amount in a mutual fund scheme at regular intervals. You can change the investment amount according to your financial circumstances.
Investment in a Systematic Investment Plan (SIP)
The investment in SIP can be done according to the choice of the investor’s investment capacity- daily, weekly, monthly, quarterly, half-yearly, or yearly.
SIP calculation conditions
Target corpus:?
Monthly investment: Rs 8,000
Annualised return: 12 per cent
How much can Rs 8,000 monthly SIP build in 10 years?
The investment amount will be Rs 9,60,000, and the estimated capital gains will be Rs 8,32,287. The estimated retirement corpus will be Rs 17,92,287.
How much can Rs 8,000 monthly SIP build in 20 years?
The investment amount will be Rs 19,20,000, and the estimated capital gains will be Rs 54,38,859. The estimated retirement corpus will be Rs 73,58,859.
How much can Rs 8,000 monthly SIP build in 30 years?
The investment amount will be Rs 28,80,000, and the estimated capital gains will be Rs 2,17,67,786. The estimated retirement corpus will be Rs 2,46,47,786.
How much can Rs 8,000 monthly SIP build in 35 years?
The investment amount will be Rs 33,60,000, and the estimated capital gains will be Rs 4,07,26,649. The estimated retirement corpus will be Rs 4,40,86,649.
How much can Rs 8,000 monthly SIP build in 37 years?
The investment amount will be Rs 35,52,000, and the estimated capital gains will be Rs 5,19,66,812. The estimated retirement corpus will be Rs 5,55,18,812.
How soon can you build Rs 5 crore corpus with Rs 8,000 monthly SIP?
It will take approximately 37 years to achieve this target corpus.
Also Read: Rs 6,000 SIP Vs Rs 6,00,000 Lump Sum: Which can generate a higher corpus in 30 years?