Power of Compounding: With a planned and strategic approach, anyone can make their post-retirement life financially stable. Even a modest sum of Rs 13,000 per month can accumulate into substantial wealth over time if invested strategically, such as in SIP mutual funds. A Systematic Investment Plan (SIP) is a market-linked long-term investment option that allows investors to invest a fixed amount in mutual funds. There is no lock-in period, and one can start investing with as low as Rs 500 per month. Also, there is no maximum limit for investing in a SIP mutual fund.
SIP investment for retirement: Key benefits of SIP
- Power of compounding
- Rupee cost averaging
- Risk tolerance
In this write-up, we will calculate how much time you need to generate a Rs 5 crore corpus with just a Rs 13,000 monthly SIP investment. For all the calculations, we are assuming a 12 per cent annualised return rate. However, it should be noted that the actual rate may vary depending on the market conditions.
How soon can you generate Rs 5 crore corpus with Rs 13,000 monthly SIP investment?
According to the calculations, you need to invest in a SIP mutual fund for at least 32 years to build a Rs 5 crore corpus with a Rs 13,000 monthly SIP.
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How to build Rs 5 crore corpus from Rs 13K/month SIP: Calculating total investment
In 32 years, you will invest a total of Rs 49,92,000.
12% SIP return investment: Calculating average capital gain
In terms of capital gain, a total of Rs 4,56,01,891 will be received.
Retirement planning with SIP: Final corpus received
Consequently, at the end of 32 years, including the principal investment and capital gain, you will get a total of Rs 5,05,93,891.
How much should I invest monthly to get Rs 5 crore corpus by retirement?
So, to create a retirement corpus of Rs 5 crore in 32 years, you need to make a monthly SIP investment of Rs 13,000.
Monthly SIP for wealth creation: Calculation for Rs 5 crore corpus with Rs 13K/month SIP
- Total Investment Amount: Rs 49,92,000
- Capital Gains: Rs 4,56,01,891
- Total Approx. Return: Rs 5,05,93,891
(Disclaimer: Our calculations are projections and not investment advice. Do your own due diligence or consult an expert for financial planning.)