Every small investment counts when it comes to investing. Even Rs 1,000 can turn into a sizeable corpus in the long run. Therefore, one should not underestimate the power of saving each month, whether a big amount or a small one. For example, investing just Rs 1,000 monthly through a Systematic Investment Plan (SIP) can help you build a massive corpus of over Rs 50 lakh. There is no harm in saving money; in fact, it is a great habit to get into, no matter how small the amount is. Thus, let’s find out how quickly you can generate the given target corpus with these monthly investments.
What is a systematic investment plan?
Let’s quickly understand what SIP is. It is an investment plan that allows you to invest a fixed amount in mutual fund(s). You can invest either daily, weekly, monthly, quarterly, or yearly, depending on your choice.
What is the power of compounding?
The power of compounding helps your money grow in the long run. When you invest your money, in return, you can earn more money, not only on the amount you initially invested but also on the profits it makes over time.
Why should you choose SIP?
Choosing a systematic investment plan is up to you. If we talk of its benefits, SIP is beginner-friendly. You can start investing with a small amount of Rs 100. It is also convenient, with automated deductions, you don’t have to worry about missing out on an investment.
Why is investing early beneficial?
To get maximum returns from investment in the long run, one should start investing early. Let’s understand it through an example.
Example of early investment
Investor A: 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
Investor B: 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, Investor A earns Rs 34,79,108 more, showcasing the power of compounding.
SIP calculation conditions
- Target corpus: Over Rs 50 lakh
- Monthly investment: Rs 1,000, Rs 3,000, Rs 5,000
- Annualised return: 12 per cent
How long will it take to build over Rs 50 lakh with Rs 1,000 monthly SIP?
It will take approximately 35 years to generate over Rs 50 lakh.
How long will it take to generate over Rs 50 lakh with Rs 3,000 monthly SIP?
It will take approximately 25 years to generate over Rs 50 lakh.
How long will it take to achieve over Rs 50 lakh with Rs 5,000 monthly SIP?
It will take approximately 21 years to generate over Rs 50 lakh.
How much can Rs 1,000 monthly SIP build in 35 years?
The investment amount will be Rs 4,20,000, the capital gains will be Rs 50,90,831, and the estimated retirement corpus will be Rs 55,10,831.
How much can Rs 3,000 monthly SIP build in 25 years?
The investment amount will be Rs 9,00,000, the capital gains will be Rs 2,06,620, and the estimated retirement corpus will be Rs 51,06,620.
How much can Rs 5,000 monthly SIP build in 21 years?
The investment amount will be Rs 12,60,000, the capital gains will be Rs 39,55,034, and the estimated retirement corpus will be Rs 52,15,034.
DISCLAIMER: Investments carry risk; seek professional guidance
