SIP Calculation: Rs 10,000/month investment, how soon can you generate Rs 1 crore corpus?
Let’s find out how soon you can build an Rs 1 crore corpus by investing Rs 10,000 monthly in a systematic investment plan.
Apart from our primary job, we all look forward to a side hustle, which could be anything, depending on your choice and potential. If you are one of those who are awaiting to land in the world of investment, or if you are already in it. Then, here is a bit of insight on what a systematic investment plan is and how you can plan for a comfortable golden years with its help. Here, we will do the calculations to find out how quickly you can generate a sizeable corpus for your retirement days by investing Rs 10,000 monthly in an SIP. Let’s find out.
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DISCLAIMER: Not financial advice; invest at your own risk
Power of compounding
With the help of compounding, your investment generates returns not only on the principal amount but also on the accumulated returns.
What is a systematic investment plan (SIP)?
SIP is a scheme where you invest a fixed amount in mutual funds. You can invest daily, weekly, monthly, quarterly, or yearly, depending on your choice. Plus, you can start your investment journey with a small amount of Rs 100.
How does SIP work?
A systematic investment plan allows you to invest a fixed amount regularly. You can set up a SIP with a mutual fund company and instruct them to deduct a fixed amount from your bank account at regular intervals.
What are benefits of SIP?
SIPs allow you to benefit from the power of compounding, where your returns are reinvested and earn further returns.
Investing through SIPs is convenient and automated, allowing you to invest regularly without having to actively manage your investments.
Why should you go for early investment?
To get maximum returns from investment in the long run, one should start investing early. Let’s understand it with the help of an example. Suppose you and your friend start investing, let’s name you Rohan and your friend Ragini: Ragini starts investing Rs 5,000/month at age 25 and continues till age 45 (20 years).
Total Investment: Rs 12,00,000
Maturity Amount (at 12 per cent annual return): Estimated Rs 45,99,287
Rohan: Starts investing Rs 5,000/month at age 35 and continues till age 45 (10 years).
Total Investment: Rs 12,00,000
Maturity Amount (at 12 per cent annual return): Estimated Rs 11,20,179
By starting 10 years earlier, Ragini earns Rs 34,79,108 more, showcasing the power of compounding.
SIP calculation conditions
Target corpus: Rs 1 crore corpus
Monthly investment: Rs 10,000
Annualised return: 12 per cent
How much can Rs 10,000 monthly SIP build in 10 years?
The investment amount will be Rs 12,00,000, the capital gains will be Rs 10,40,359, and the estimated retirement corpus will be Rs 22,40,359.
How much can Rs 10,000 monthly SIP build in 15 years?
The investment amount will be Rs 18,00,000, the capital gains will be Rs 29,59,314, and the estimated retirement corpus will be Rs 47,59,314.
How much can Rs 10,000 monthly SIP build in 20 years?
The investment amount will be Rs 25,20,000, the capital gains will be Rs 79,10,067, and the estimated retirement corpus will be Rs 1,04,30,067.
How fast can you build Rs 1 crore with Rs 10,000 monthly SIP?
It will take approximately 21 years to build Rs 1 crore with Rs 10,000 monthly SIP investment.