Power of Rs 3,250 SIP: In how many years you can generate Rs 1,00,00,000 corpus with just Rs 3,250 monthly investment? Check calculations
Power of Compounding: The process of generating interest on both the initial investment and the interest that has accrued is known as compounding. This implies that the gains generated by your growing SIP are reinvested, resulting in future returns that are even larger.
The Systematic Investment Plan (SIP) is a method of investing a fixed sum of money in mutual funds regularly, such as daily, monthly, quarterly, or half-yearly. As a long-term investment strategy, it can be beneficial. SIP develops a disciplined saving habit. You can start an SIP with a small amount and can increase it as and when comfortable. With proper planning, you can achieve your financial goals on or before retirement, depending on your financial needs.
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Mutual Fund SIP
In this article, we will have a detailed look at SIP and calculate how many years it will take to generate a Rs 1 crore corpus by investing Rs 3,250 per month in SIP.
Flexibility
SIP has many benefits, and one of them is flexibility. You can choose an amount and date as per your needs. There is also the option of choosing weekly, monthly, quarterly, or half-yearly payments.
Minimum investment in SIP
You can start an SIP with as little as Rs 500. However, SEBI has recently proposed a monthly SIP for a low ticket size of Rs 250.
Compounding in SIP
The process of generating interest on both the initial investment and the interest that has accrued is known as compounding. This implies that the gains generated by your growing SIP are reinvested, resulting in future returns that are even larger.
How compounding works in SIP
In a SIP, you invest a fixed amount consistently (e.g., monthly) in a mutual fund. The accrued returns, including interest, are reinvested back into the fund. This means that your future profits are not just on the initial investment but also on the accumulated value of your SIP.
For example, your initial amount of Rs 100 that generates 5 per cent interest annually, after one year, you will have Rs 105. By the end of the second year, the total value will be Rs 110.25.
Wealth creation
You can achieve your financial goals even with small, regular SIPs. The power of compounding plays a big role in accumulating the desired fund. You just need to do proper planning on time.
Rs 3,250 per month SIP
If you invest Rs 3,250 per month, you can accumulate more than a Rs 1 crore corpus in 30 years, calculations show.
Calculations of Rs 1 crore corpus
SIP: Rs 3,250/month
Time: 30 years
Invested amount: Rs 11,70,000
Total value: Rs 1,00,13,163
Estimated rate of returns
The above calculations are based on an estimated annualised return of 12 per cent.
Conclusion
From the above calculations, we can understand that even if you start investing at age 30 and want a Rs 1 crore retirement corpus, you can easily achieve your goal by retirement.