Power of Rs 10,000 SIP: How large corpus can Rs 10,000 monthly investment create at 10-15% return in 1-40 years?

Power of Compounding: The power of compounding rewards a long-term investor as the corpus grows faster with time. But if, on the same investment and in the same duration, you draw 1 per cent extra return than expected, you may create a corpus that will be larger not by a few lakhs but by a few crores. We draw comparisons of your Rs 10,000 monthly SIP investment in 20, 30, and 40 years at 10%-15% annualised return to show how a per cent extra return can generate a significantly larger corpus for you.

Power of compounding

To explain the power of compounding, we take 2 examples. In the first, see how an Rs 10 lakh lump sum investment grows at a 12 per cent annualised return in 20 to 40 years.

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In 20 years, expected capital gains will be Rs 86,46,293 and the estimated corpus will be Rs 96,46,293.

In 40 years, expected capital gains will be Rs 9,20,50,970 and the expected corpus will be Rs 9,30,50,970.

You can see how the power of compounding can transform an investment in the long run. Just in 20 years, the corpus grew by 8,34,04,677. This is the reward of staying in an investment for long.

In the second example, see what the estimated corpus will be if a Rs 10 lakh investment grows at a 12%-15% annualised return in 30 years.

At a 12 per cent annualised return, estimated capital gains will be Rs 2,89,59,922 and the estimated corpus will be Rs 2,99,59,922.

At a 13 per cent annualised return, estimated capital gains will be Rs 3,81,15,898 and the estimated corpus will be Rs 3,91,15,898.

At a 14 per cent annualised return, estimated capital gains will be Rs 4,99,50,159 and the estimated corpus will be Rs 5,09,50,159.

At a 15 per cent annualised return, estimated capital gains will be Rs 6,52,11,772 and the estimated corpus will be Rs 6,62,11,772.

You can see that the corpus grew more than double if the investor got a 15 per cent annualised return instead of 12 per cent.

Corpus from Rs 10,000 monthly SIP investment at different rates

Here, we will calculate how your Rs 10,000 monthly SIP may grow if you get a 10%-15% annualised return in 20-, 30-, and 40-year periods.

Rs 10,000 monthly SIP investment at 10%-15% return in 20 years

In the table, you can see that in 20 years, at 10% per cent, the total estimated corpus is Rs 72,39,867, while in 40 years, it is Rs 1,32,70,734.

The difference will be more starting as the duration increases.

Rs 10,000 monthly SIP investment at 10%-15% return in 30 years

In 30 years, at a 10 per cent annualised return, the estimated corpus generated is Rs 20,792,927, but at a 15 per cent annualised return, the estimated corpus will be Rs 56,317,704.

Now, see how the gap widens in 40 years.

Rs 10,000 monthly SIP investment at 10%-15% return in 40 years

In 40 years, at a 10 per cent annualised return, the estimated corpus will be Rs 55,946,074, but at a 15 per cent annualised return, the estimated corpus will be Rs 230,466,705.

Conclusion

If one gets a higher return on the same investment, they can create a much larger corpus in the long run because of the power of compounding.

(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)