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The power of compounding is an important factor to help your money grow, it focuses not just on what you invest but also on the returns you earn over time. The longer you invest, the bigger your money grows. Even small amounts invested regularly can convert into a large amount in the long run. Thus, let’s find out how much you need to invest every month in a Systematic Investment Plan (SIP) to build a Rs 1 crore retirement corpus.
Introduction to Systematic Investment Plan
SIP is a simple way to invest a fixed amount of money regularly in mutual fund(s). You can choose to invest daily, weekly, monthly, quarterly, or yearly, whichever suits you best.
Why should you go for SIP?
SIP is a simple way to start investing with as little as Rs 100. Plus, it’s easy to handle as your investments are deducted automatically, so you’ll never miss a payment.
Why early investment is important?
Investing early gives more time for your investment to grow in the long run.
Early investment
Let’s understand it through an example.Rahul starts investing Rs 1,000 per month at age 20.After 40 years, he gets an estimated Rs 1.18 crore.
His friend, Rohan, starts investing Rs 1,000 per month at age 30.After 30 years, he gets Rs 35 lakh.
Rahul started 10 years earlier and got 3 times more returns.
SIP calculation condition
We are assuming a 12 per cent annualised return rate. Target corpus: Rs 1 croreLet’s find out what should be your monthly SIP amount.
What should be your monthly investment amount to build Rs 1 crore retirement corpus?
If you want to build a corpus of Rs 1 crore in 25 years, you need to invest Rs 6,000 in a monthly SIP. By the time you are 55, you will have a retirement corpus of Rs 1 crore.
How long it will take to create a corpus of Rs 1 crore corpus?
It will take approximately 25 years to generate Rs 1 crore retirement corpus.
How much can Rs 6,000 SIP build in 10 years?
The investment amount will be Rs 7,20,000, the estimated capital gains will be Rs 6,24,215, and the estimated retirement corpus will be Rs 13,44,215.
How much can Rs 6,000 monthly SIP build in 20 years?
The investment amount will be Rs 14,40,000, the estimated capital gains will be Rs 40,79,144, and the estimated retirement corpus will be Rs 55,19,144.
How much can Rs 6,000 monthly SIP build in 25 years?
The investment amount will be Rs 18,00,000, the estimated capital gains will be Rs 84,13,239, and the estimated retirement corpus will be Rs 1,02,13,239.
(Disclaimer: Our calculations are projections and not investment advice. Do your own due diligence or consult an expert for financial planning)
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