Power of SIP for Retirement: How Rs 7,000 monthly investment can build Rs 7 crore corpus; see calculation
Let’s see how investing Rs 7,000 monthly in a systematic investment plan (SIP) can help build Rs 7 crore retirement corpus. Learn how a simple SIP plan can help you achieve your financial goals.
Planning for retirement won’t be complicated with the right investment strategy. A Systematic Investment Plan (SIP) allows you to invest a fixed amount every month and watch it grow over time. For example, investing just Rs 7,000 per month in SIP could help individuals build a large retirement corpus of Rs 7 crore. The secret lies in the power of compounding, which helps your money multiply over the years. In this article, we’ll break down the calculations, explain the magic of disciplined investing, and show you how small, consistent efforts can help achieve your dream retirement.
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(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)
Introduction to SIP
SIP is a simple and convenient way to invest in mutual funds. One can invest a fixed amount daily, weekly, monthly, half-yearly, or yearly.
How does Systematic Investment Plan (SIP) work?
Individuals can choose the amount to invest, starting as low as Rs 100.
The amount is automatically deducted from your bank account and invested in the fund of your choice.
Power of compounding
The power of compounding is a simple yet powerful concept that helps your money grow over time by earning returns on both your initial investment and the returns you have already earned.
Why starting early is key to big corpus?
Starting early could help build a big corpus because it gives your investments more time to grow and benefit from the power of compounding.
Benefits of SIP
Affordable
Flexible
Long-term wealth creation
SIP: Calculations
Here, we will take 12 per cent annualised returns on a monthly SIP of Rs 7000. We will break down the calculations year-wise.
What will be your corpus in 10 years with Rs 7,000 SIP at 12 per cent annualised return?
In 10 years, the estimated corpus will be Rs 16,26,374. During this time, the estimated invested amount will be Rs 8,40,000 and the estimated capital gains will be Rs 7,86,374.
What will be your corpus in 20 years with Rs 7,000 SIP at 12 per cent annualised return?
In 20 years, the estimated corpus will be Rs 69,94,035. During this time, the estimated invested amount will be Rs 16,80,000 and the estimated capital gains will be Rs 53,14,035.
What will be your corpus in 30 years with Rs 7,000 SIP at 12 per cent annualised return?
In 30 years, the estimated corpus will be Rs 2,47,09,396. During this time, the estimated invested amount will be Rs 25,20,000 and the estimated capital gains will be Rs 2,21,89,396.
What will be your corpus in 39 years with Rs 7,000 SIP at 12 per cent annualised return?
Take a look at estimated returns over an extended period, like 39 years. The estimated retirement corpus will be Rs 7,37,35,739. During this time, the estimated invested amount will be Rs 32,76,000 and the estimated capital gains will be Rs 7,04,59,739.
Estimated returns calculations
As per calculations, investors estimated retirement corpus over an extended period of 39 years will be approximately Rs 7.37 crore.
How many years will it take to achieve the target of Rs 7 crore retirement corpus?
It will approximately take 39 years to achieve this target.