Power of Compound Interest: How soon Rs 11,000/month SIP can generate Rs 2 crore & Rs 3 crore retirement corpus?
Power of Compounding: If your goal is to build a large corpus in the long term, even a small amount can do wonders. Monthly SIPs of Rs 5,000, Rs 7,000, and Rs 11,000 can help you build a corpus of Rs 1 crore or Rs 2 crore. In this article, we will calculate how long it will take to build a substantial corpus from a monthly Systematic Investment Plan (SIP) of Rs 11,000.
Power of Compounding: If your goal is to build a large corpus in the long term, even a small amount can do wonders. Monthly SIPs of Rs 5,000, Rs 7,000, and Rs 11,000 can help you build a corpus of Rs 1 crore or Rs 2 crore. The key is to start early, be disciplined, and give your investments enough time to grow. In this article, we will calculate how long it will take to build a substantial corpus from a monthly Systematic Investment Plan (SIP) of Rs 11,000.
(Disclaimer: Our calculations are projections and not investment advice. Do your own due diligence or consult an expert for financial planning.)
What is SIP?
SIP in mutual funds is an investment strategy where an investor contributes a fixed amount at a regular interval, based on their financial capacity.
Benefits of SIP
- Can investment amount as low as Rs 500
- Flexibility in investment
- Rupee cost averaging
- Power of compounding
Flexibility in investment
This interval can be monthly, weekly, or annually.
Power of compounding
The power of compounding creates a snowball effect that helps your investments grow exponentially over time.
Early investment is the key
Time is one of the most valuable factors when it comes to investing through SIP. Let's understand through examples -
Assuming a 12% annual return
For all calculations, we are assuming an annual return rate of 12 percent.
SIP Investment: Consider 2 scenarios
Suppose you are investing Rs 11,000 every month in SIP mutual funds. Now, consider two scenarios -
- Scenario 1: The goal is to build a retirement corpus of Rs 2 crore with an SIP of Rs 11,000 per month.
- Scenario 2: The goal is to build a retirement corpus of Rs 3 crore with an SIP of Rs 11,000 per month.
How much time will it take to achieve the goal?
Now, can you guess how much time it will take to achieve this target? Let's calculate and find out -
How quickly can you build a retirement corpus of Rs 2 crore with a monthly SIP of Rs 11,000?
To create a retirement corpus of Rs 2 crore, you would need to invest Rs 11,000 monthly in SIP for at least 26 years, the calculations show.
Rs 2 crore with 11,000 monthly SIP in 26 years: Calculations
Total Investment: Rs 34,32,000
Estimated Capital Gain: Rs 1,76,79,616
Total Corpus Received: Rs 2,11,11,616
How quickly can you build a retirement corpus of Rs 3 crore with a monthly SIP of Rs 11,000?
As per the calculations, you would need to invest in SIP for at least 29 years to create a retirement corpus of over Rs 3 crore with a monthly investment of Rs 11,000.
Rs 3 crore with 11,000 monthly SIP in 29 years: Calculations
Total Investment: Rs 38,28,000
Estimated Capital Gain: Rs 2,63,06,173
Total Corpus Received: Rs 3,01,34,173