Power of Rs 18,000 SIP: How to make Rs 21 crore, with a monthly investment of just Rs 18,000?
Imagine building a huge retirement fund of Rs 21 crore by investing just Rs 18,000 every month. Sounds too good to be true? But with a smart investment strategy, it is achievable. In this article, we will explore how monthly investments in a Systematic Investment Plan (SIP) can grow your wealth over time with the help of the power of compounding. We will understand it with simple maths and find out how long it will take to generate Rs 21 crore with Rs 18,000 monthly SIP.
What is SIP?
A structured investment plan is a way of investing a fixed amount in mutual funds. Investors can invest daily, weekly, monthly, quarterly, or annually, depending on their choice.
Why choose SIP?
SIP is ready to start, by investing as little as Rs 100 every time, first time investors can start their journey of building a huge corpus. It’s also convenient, with automatic withdrawals you don’t have to worry about missing out on an investment.
Why should one start investing early?
To get maximum return on investment over time one should start investing early. Let’s understand it with an example.
Start early
Investor A: Starts investing Rs 5,000/month at age 25 and continues till age 45 (20 years).
Total Investment: Rs 12,00,000
Growth Amount (at 12% annual return): Rs 50,00,000
Investor B: Starts investing Rs 5,000/month at age 35 and continues till age 55 (20 years).
Total Investment: Rs 12,00,000
Growth Rate (at 12% annual return): Rs 28,00,000
Starting 10 years earlier, Investor A earns R22,00,000 more, showing the power of compounding.
SIP calculations
Target corpus: Rs 21 crore
Monthly investment: Rs 18,000
Annual return: 12 percent
How long will it take to build a corpus of Rs 21 crore
It will probably take 40 years to make Rs 21 crore.
How much Rs 18,000 monthly SIP can build up in 10 years?
The investment amount will be Rs 21,60,000, the capital gain will be Rs 20,22,103, and the estimated retirement corpus will be Rs 41,82,103.
How much Rs 18,000 monthly SIP can build up in 20 years?
The investment amount will be Rs 43,20,000, the maximum benefit will be Rs 1,36,64,663, and the estimated retirement corpus will be Rs 1,79,84,663.
How much Rs 18,000 monthly SIP can build up in 30 years?
The investment will be Rs 64,80,000, the capital gain will be Rs 5,70,58,448, and the estimated retirement corpus will be Rs 6,35,38,448.
How much Rs 18,000 monthly SIP can build up in 40 years?
The investment amount will be Rs 86,40,000, the maximum benefit will be Rs 20,52,43,564, and the estimated retirement corpus will be Rs 21,38,83,564.
(Disclaimer: Our calculations are estimates and not investment advice. Do your best or consult a professional for financial planning)
