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Power of Compounding: How long it will take to build Rs 1 crore corpus with Rs 1,500, Rs 3,500 and Rs 5,500 monthly investment?
- Written by Anamika Singh
Published: 11:21 AM, Jan 20, 2025
|Updated: 11:21 AM, Jan 20, 2025
One must never overlook the power of small amounts, they can make a big difference in the long run. In this article, we will understand how compounding can help one generate Rs 1 crore by investing Rs 1,500, Rs 3,500, and Rs 5,500 in a monthly systematic investment plan (SIP). we will find out the time frame required to achieve this target through calculations.
Photos source: Pixabay/Representational
(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)
Read more: Power of Rs 18,000 SIP: Can one generate Rs 21 crore, with just Rs 18,000 monthly investment?
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What is power of compounding?
The power of compounding is the process of earning returns on returns, that is the amount of money you invest will generate earnings from both the principal amount and the accrued earnings of compounding periods.
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What is SIP?
A systematic investment plan allows investors to invest a fixed amount in a mutual fund scheme at regular intervals. The investment in SIP can be done according to the choice of the investor’s investment capacity- daily, weekly, monthly, quarterly, half-yearly, or yearly.
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What are benefits of compounding?
Encourages long-term financial goal planning Reduces risk Early investment can build a sizeable amount in the long run
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Follow disciplined approach
A disciplined investment with a consistent contribution can help investors create a large retirement corpus with the effect of the power of compounding.
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SIP calculations
Target corpus: Rs 1 crore Monthly investment: Rs 1,500, Rs 3,500, Rs 5,500 Annualised return: 12 per cent
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How long it will take to build Rs 1 crore with Rs 1,500 monthly SIP
It will approximately take 36 years to build Rs 1 crore with Rs 1,500 monthly SIP. For example, if you start investing at the age of 20, you will reach your target corpus at the age of 56.
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From Rs 1,500 monthly SIP to Rs 1 crore corpus at 12 per cent annualised return
The investment amount will be Rs 6,48,000, the estimated capital gains will be Rs 1,03,49,762 and the estimated retirement corpus will be Rs 1,09,97,762.
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How long it will take to build Rs 1 crore with Rs 3,500 monthly SIP
It will approximately take 29 years to build Rs 1 crore with Rs 3,500 monthly SIP. For example, if you start investing at the age of 25, you will reach your target corpus at the age of 54.
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From Rs 3,500 monthly SIP to Rs 1 crore corpus
The investment amount will be Rs 12,18,000, the estimated capital gains will be Rs 97,06,381 and the estimated retirement corpus will be Rs 1,09,24,381.
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How long it will take to build Rs 1 crore with Rs 5,500 monthly SIP
It will approximately take 25 years to build Rs 1 crore with Rs 5,500 monthly SIP. For example, if you start investing at the age of 25, you will reach your target corpus at the age of 50.
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From Rs 5,500 monthly SIP to Rs 1 crore corpus
The investment amount will be Rs 16,50,000, the estimated capital gains will be Rs 87,86,993 and the estimated retirement corpus will be Rs 1,04,36,993.
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