Mutual Fund SIP 20-20-20 Formula: How you can accumulate Rs 27,00,000 and Rs 31,00,000 corpus with just Rs 20 daily savings for SIP investment, know here
SIP (systematic investment plan) in mutual funds has been gaining popularity for some time now. According to the Association of Mutual Funds in India's (AMFI) recent data, SIP contributions rose to Rs 26,632 crore in April 2025, the biggest amount ever received in a single month. The sector added 46 lakh new SIP accounts last month, which is more than the 40.19 lakh that were added in March and the month before. Compounding plays a significant role in growing your wealth over time. Even the smallest contribution can turn into a good corpus in a long time.
Images: Pixabay
SIP 20-20-20 formula
In this article, we will explain the mutual fund SIP 20-20-20 formula. We will also calculate how you can accumulate funds of Rs 34 lakh with just Rs 20 daily savings for the SIP. Take a look:
What is the SIP formula?
There are various formulas in SIP that you can choose as per your financial goals. Some of them include - 25X13X25, 20x12x21, 26+12+26, 5+15+25, and many others.
What is the 20-20-20 formula in SIP?
In the formula -
The first "20" represents a monthly SIP of Rs 600 (Rs 20 daily)
The second "20" denotes the 20% annual step-up
And the last "20" signifies the number of years, i.e., one needs to invest in SIP for 20 years.
SIP 20-20-20 formula explanation
If you invest Rs 20 daily in SIP (Rs 600/month) and increase your SIP amount by 20 per cent (step-up SIP) every year then you can achiee your financial goal of making Rs 34 lakh corpus in 20 years.
How does compounding work 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.
Flexibility in SIP
There is so much flexibility in SIP. You can increase or decrease your investment amount as per your need. There is also the option of choosing weekly, monthly, quarterly, or half-yearly payments.
How to make a Rs 27 lakh corpus by using 20-20-20 formula?
Invested amount: Rs 13,44,154 (Rs 600/month)
Estimated return (at 12%): Rs 14,03,003
Total value: Rs 27,47,156
How to make a Rs 31 lakh corpus by using 20-20-20 formula?
Invested amount: Rs 13,44,154 (Rs 600/month)
Estimated return (at 14%): Rs 18,26,467
Total value: Rs 31,70,621
Conclusion
Calculations show that if an individual invests Rs 600 per month for 20 years and increase the investment by 20 per cent every year, then he can achieve more than Rs 27 lakh fund in the desired time at 12 per cent annualised return. Similarly, if they get a 14 per cent annualised return, they can accumulate over Rs 31 lakh in 20 years.
Investing in mutual funds is subject to market risks. Consult your advisor before making any investment.