The amount you initially invest will generate earnings from the initial principal amount & accrued earnings with the help of the power of compounding. During the investment period, the returns that you earn on your investment keep getting added back to the principal, and the return amount is then calculated on the new principal amount. Now, since the principal amount keeps growing every year, so does your return. This is the power of compounding.
Let’s understand it with an example: if you decide to invest Rs 2,00,000 at a rate of return of 12% today, then at the end of 5 years, your maturity amount will be Rs 3,52,468. That implies that you have earned Rs 1,52,468 without putting in any hard work. The only thing at work here is the power of compounding return. On that note, let’s find out how soon you can generate Rs 4 crore corpus with just Rs 6,000 monthly SIP investment.
What is SIP?
A systematic investment plan is a way 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: Rs 4 crore
Monthly investment: Rs 6,000
Annualised return: 12 per cent
How much can Rs 6,000 monthly SIP build in 10 years?
The investment amount will be Rs 7,20,000, and the estimated capital gains will be Rs 6,24,215. The estimated retirement corpus will be Rs 13,44,215.
How much can Rs 6,000 monthly SIP build in 20 years?
The investment amount will be Rs 14,40,000, and the estimated capital gains will be Rs 40,79,144. The estimated retirement corpus will be Rs 55,19,144.
How much can Rs 6,000 monthly SIP build in 30 years?
The investment amount will be Rs 21,60,000, and the estimated capital gains will be Rs 1,63,25,839. The estimated retirement corpus will be Rs 1,84,85,839.
How much can Rs 6,000 monthly SIP build in 35 years?
The investment amount will be Rs 25,20,000, and the estimated capital gains will be Rs 3,05,44,987. The estimated retirement corpus will be Rs 3,30,64,987.
How much can Rs 6,000 monthly SIP build in 37 years?
The investment amount will be Rs 26,64,000, and the estimated capital gains will be Rs 3,89,75,109. The estimated retirement corpus will be Rs 4,16,39,109.
How soon can you build Rs 4 crore corpus with Rs 6,000 monthly SIP?
It will take approximately 37 years to achieve this target corpus.
Also Read: Power of Rs 1,50,000 PPF Investment: How many years will it take to generate over Rs 75,000/month tax-free income from Public Provident Fund?