Power of Step up SIP: Is it possible to build over Rs 12 crore corpus, starting with just Rs 8,000 monthly investment?
You must have heard how investing in a systematic investment plan can help you build a sizeable corpus. Now, let's explore step-up SIP, which may create a larger corpus in comparison to regular SIP, that too in a shorter period than that of a regular SIP. Take a look.
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01:05 PM IST
In step up SIP, you can gradually increase your investment contribution over time. Suppose, at the beginning of the investment, you started off with a small amount, but after a year or so your income increased, and now you want to contribute a little more to that investment scheme. So, in step up SIP, you have the option, you increase your monthly investment amount in a mutual fund at a set interval (like annually), rather than investing a fixed amount. On that note, let’s find out if it is possible for you to build over Rs 12 crore corpus, starting with just Rs 8,000 monthly investment.
What is Step Up SIP?
Step-up SIP is a variation of regular SIP, where instead of investing a fixed amount regularly, you can gradually increase your contribution over time.
How does Step up SIP investment work?
You can choose to increase your investment amount by a fixed percentage every year. Be it 5 per cent or 10, depending on your choice. You can simply increase your SIP amount by adding a fixed amount to it yearly.
Why choose step up SIP?
Choosing a step up SIP for investment depends on an investor's choice. But if we talk about its benefits, here are a few that you can take a look at:
Step up SIP is also known as Top up SIP, it allows you to take advantage of market opportunities and increase your return over time. It also helps you to keep a match with inflation and maintain your purchasing power.
Who should invest in Step up SIP?
- Investors with long-term investment horizons can take advantage of Step up SIP by consistently increasing their investment over time.
- Investors with fluctuating cash flows like freelancers or seasonal workers can opt for Step up SIPs to adjust their investment amounts accordingly.
Step up SIP calculation conditions
- Target corpus: over Rs 12 crore corpus
- Investment amount: starting with Rs 8,000 monthly investment
- Annual step up: 5 per cent
- Annualised return: 12 per cent
How long it will take to generate over Rs 12 crore corpus starting with Rs 8,000 monthly SIP
It will take approximately 40 years to generate this amount.
What will be your retirement corpus in 10 years?
The investment amount during this period with a starting investment of Rs 8,000 monthly, 5 per cent annual step up, and an annualised return of 12 per cent will be Rs 12,07,478. The estimated capital gains will be Rs 9,47,439, and the estimated retirement corpus will be Rs 21,54,917.
What will be your retirement corpus in 20 years?
The investment amount will be Rs 31,74,332, the estimated capital gains will be Rs 70,28,647, and the estimated retirement corpus will be Rs 1,02,02,978.
What will be your retirement corpus in 30 years?
The investment amount will be Rs 63,78,129, the estimated capital gains will be Rs 3,10,28,409, and the estimated retirement corpus will be Rs 3,74,06,539.
What will be your retirement corpus in 40 years?
The investment amount will be Rs 1,15,96,778, the estimated capital gains will be Rs 11,38,95,681, and the estimated retirement corpus will be Rs 12,54,92,459.
(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)
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