Power of Compounding: How Rs 14,000 monthly SIP investment for 5 extra years can double your corpus; understand through calculations

SIP is a type of investment in mutual funds in which you invest a fixed amount every week, month, quarter, or year.

An amount that you choose for investment automatically gets deducted from your bank account and invested in the mutual fund of your choice.

There is full liberty to adjust your investment amounts based on goals and risk profile.

When the market fluctuates, rupee cost averaging helps SIP investors average their investments. This strategy helps investors buy more units when prices are low and fewer units when prices are high.

Market risk: Since SIPs invest in mutual funds, which further invest in stock markets, this is subject to market fluctuations.

The entry and exit time in the market can affect overall returns.

In SIP, you may need to lock your money for three years.

Suppose you start investing Rs 14,000 per month in a SIP and you invest regularly for 21 years. Then your total investment would be Rs 35,28,000 (Rs 35.28 lakh) in 21 years. On an estimated annual return of 12 per cent, your returns would be Rs 1,24,13,439 (Rs 1.24 crore) and the maturity amount would be Rs 1,59,41,439 (Rs 1.59 crore).

Increasing time in SIP investments can make a huge difference. For example, if you keep investing the same amount for five more years, then your maturity amount will be Rs 3,01,15,569 (Rs 3.01 crore).

Total investment in 26 years: 43,68,000 (Rs 43.68 lakh) Expected returns: 12 per cent Estimated returns: 2,57,47,569 (Rs 2.57 crore) Maturity amount: 3,01,15,569(Rs 3.01 crore)

Investing in mutual funds is subject to market risks. Consult your advisor before making any investment.