SIP for Retirement: How your Rs 30,000 monthly SIP investment can generate Rs 4,14,00,000 corpus in long term

SIP for Retirement: Systematic Investment Planning (SIP) in a mutual fund gives an investor the convenience of starting an investment with as little investment as Rs 100, but if used for the long term, a small investment amount may help them build a giant corpus. Such a corpus created can be 25X, 50X, or 100X the principal.

Likewise, if you are a 25-year-old investor, start an Rs 30,000 monthly SIP investment for 5 years, stop it by 30 years of age, and let the amount grow for another 25 years, you may gather an estimated corpus of Rs 4,14,00,000 or higher by the time you turn 55 years old!

Through projections, know how it may be possible!

Starting an investment at 25 years of age

Twenty-five years can be a good age to start a long-term investment.

This is the age by which most people start to earn.

If they invest a part of their monthly income, they may build a sizeable corpus by the time they turn 50 years old.

Starting to invest early will also give more years for compound growth of their investments compared to those who start late.

Let’s see how an Rs 10,000 monthly SIP investment or an Rs 10 lakh investment can grow for a 25-year-old at a 12 per cent annualised return by the time they turn 50 years old.

The total SIP investment in 25 years will be Rs 30,00,000, estimated capital gains will be Rs 1,40,22,066, and the estimated corpus will be Rs 1,70,22,066.

As far as the Rs 10 lakh lump sum investment is concerned, estimated capital gains in 25 years will be Rs 1,60,00,064, and the estimated corpus will be Rs 1,70,00,064.

In both cases, you can see that by the age of 50, they may create a corpus that is multiple times their principal investment. 

Rs 30,000 monthly SIP investment for 5 years

Now let’s see how large a corpus a 25-year-old may create with an Rs 30,000 monthly SIP investment in 5 years.

In 5 years, the total investment will be Rs 18,00,000, estimated capital gains will be Rs 6,33,108, and the estimated corpus will be Rs 24,33,108.

How to create Rs 4,14,00,000 corpus

Now after creating this corpus, if one stops investing and just lets the corpus grow for another 25 years at a 12 per cent annualised return, let’s see what may be the outcome of this long wait.

The estimated capital gains will increase to Rs 3,89,29,885, while the estimated corpus will zoom to Rs 4,13,62,993. See the table to know how your investment may grow over the years.

This is when you get a 12 per cent annualised return on the entire corpus for 30 years.

Let’s see what may be the estimated corpus if you get an annualised return of 13 per cent, 14 per cent, and 15 per cent on the same corpus.

At a 13 per cent return, estimated capital gains will be Rs 5,04,57,117 and the estimated corpus will be Rs 5,29,51,223. (see investment growth table)

At a 14 per cent return, estimated capital gains will be Rs 6,50,92,929 and the estimated corpus will be Rs 6,76,49,411. (see investment growth table)

At a 15 per cent return, estimated capital gains will be Rs 8,36,36,019 and the estimated corpus will be Rs 8,62,56,281. (see investment growth table)

(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)