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Power of Compounding: Know how you can create a corpus of Rs 50 lakh with Rs 511 SIP/month; understand with examples
- Written by Bhawna Gupta
Published: Zee Business| Updated: Zee Business
Through a small SIP (systematic investment plan), investors can create a big corpus over a period of time, but they need to be consistent. SIP is a way to invest in mutual funds where you invest a fixed amount regularly. It can be weekly, monthly, or quarterly. If you stay disciplined, then compounding will play its role to fulfill your financial goal. SIPs are affordable investments; you can start an SIP with a minimum of Rs 100. However, it depends on the fund house's terms and conditions. On the other hand, when you buy mutual fund units, the amount is not fixed every time you invest. It depends on the market. If the market is low, you can buy more units, and when it is high, you can buy fewer units.
This article will talk about a Rs 50 lakh corpus and show calculations on how you can create this amount by doing a Rs 511 SIP per month. Take a look:
Images: Pixabay, Freepik
1/9
How SIP works
1/9- Choose a mutual fund to invest - Decide SIP amount and duration in a year - Select investment date - Then, it will automatically be deducted from your bank account
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Flexibility in SIP
2/9There is so much flexibility in SIP. You can pause, stop, decrease, or increase your SIP amount anytime you want to. However, you need to check the fund house's rules before thinking of changing anything.
3/9
Risk with SIPs
3/9Since the returns in SIPs depend on the market, it is a risky investment. There are no fixed returns or interest.
4/9
SIP can be suitable for these
4/9An SIP is considered the best investment option for salaried people, long-term investment planners, and first-time investors, among others.
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What are the types of SIP?
5/9There are many types of SIPs. These include regular SIP, step-up SIP, flexible SIP, Trigger SIP, and Perpetual SIP.
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SIP in mutual funds
6/9Investors can choose any fund out of equity, debt, hybrid, index, and other categories of mutual funds to invest.
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How to create a corpus of Rs 50 lakh with Rs 511 SIP month
7/9If an individual starts an SIP of Rs 511 per month and keeps investing for 40 years, they can easily create a fund of Rs 50,00,000, as per the calculations.
8/9
Calculations for creating a Rs 50 lakh fund
8/9Monthly SIP: Rs 511 Time period: 40 years Invested amount: Rs 2,45,280 Estimated return rate: 12%/annum Estimated returns: Rs 47,58,979 Total value: Rs 50,04,259
9/9
Conclusion
9/9From the above calculations, we can understand why experts advise starting SIP early. This is because a small SIP can create a big fund if you keep investing for a long time. Even a small amount can play a big role because of compounding and help you fulfill your financial goal.
Our calculations are projections and not investment advice. Do your own due diligence or consult an expert for financial planning.
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