Here’s an example to help you figure out how you can benefit from compounding by starting early and staying consistent. Suppose two friends, Jyoti and Shikha, start investing. Jyoti 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
Shikha 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, Jyoti 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 7,00,00,000 corpus with just Rs 9,000 monthly investment.
What is SIP?
A systematic investment plan is a way of investing a fixed amount in mutual funds 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 7 crore
- Monthly investment: Rs 9,000
- Annualised return: 12 per cent
How much can Rs 9,000 monthly SIP build in 10 years?
The investment amount will be Rs 10,80,000, and the estimated capital gains will be Rs 9,36,323. The estimated retirement corpus will be Rs 20,16,323.
How much can Rs 9,000 monthly SIP build in 20 years?
The investment amount will be Rs 21,60,000, and the estimated capital gains will be Rs 61,18,716. The estimated retirement corpus will be Rs 82,78,716.
How much can Rs 9,000 monthly SIP build in 30 years?
The investment amount will be Rs 32,40,000, and the estimated capital gains will be Rs 2,44,88,759. The estimated retirement corpus will be Rs 2,77,28,759.
How much can Rs 9,000 monthly SIP build in 35 years?
The investment amount will be Rs 37,80,000, and the estimated capital gains will be Rs 4,58,17,480. The estimated retirement corpus will be Rs 4,95,97,480.
How much can Rs 9,000 monthly SIP build in 38 years?
The investment amount will be Rs 41,04,000, and the estimated capital gains will be Rs 6,59,64,602. The estimated retirement corpus will be Rs 7,00,68,602.
How soon can you build Rs 7 crore corpus with Rs 9,000 monthly SIP?
It will take approximately 38 years to achieve this target corpus.
Also Read: SIP Calculation: Rs 20,000/month investment, how quickly can you generate Rs 7 crore corpus? See calculations