Power of SIP: Systematic Investment Plan (SIP) is an investment route offered by Mutual Funds wherein investors can invest a fixed amount in a Mutual Fund scheme at regular intervals, say monthly. The instalment amount could be as little as Rs 500 a month. It’s convenient as you can give your bank standing instructions to debit the amount every month.
Now, let’s understand with the help of calculations which would generate a higher corpus: a Rs 15000 monthly investment for 25 years or a Rs 40,000 monthly investment for 10 years.
Power of SIP: Rs 15000 monthly investment for 25 years
Investment period: 25 years
Annualised return: 12 per cent
Power of SIP: How much can Rs 15,000 monthly SIP build in 10 years?
In 10 years, the investment amount will be Rs 18,00,000, the estimated return in 10 years could be Rs 16,85,086, and the estimated corpus in 10 years could be Rs 34,85,086.
Power of SIP: How much can Rs 15,000 monthly SIP build in 20 years?
In 20 years, the investment amount will be Rs 36,00,000, the estimated return in 20 years could be Rs 1,13,87,219, and the estimated corpus in 20 years could be Rs 1,49,87,219.
Power of SIP: How much can Rs 15,000 monthly SIP build in 25 years?
In 25 years, the investment amount will be Rs 45,00,000, the estimated return in 25 years could be Rs 2,39,64,526, and the estimated corpus in 25 years could be Rs 2,84,64,526.
Power of SIP: Rs 40000 monthly investment for 10 years
Investment amount: Rs 40,000 monthly SIP
Investment period: 10 years
Annualised return: 12 per cent
Power of SIP: How much can Rs 40,000 monthly SIP build in 5 years?
In 5 years, the investment amount will be Rs 24,00,000, the estimated return in 5 years could be Rs 8,99,455, and the estimated corpus in 5 years could be Rs 32,99,455.
Power of SIP: How much can Rs 40,000 monthly SIP build in 10 years?
In 10 years, the investment amount will be Rs 48,00,000, the estimated return in 10 years could be Rs 44,93,563, and the estimated corpus in 10 years could be Rs 92,93,563.
Rs 15k monthly investment for 25 years vs Rs 40k monthly investment for 10 years
Thus, it is quite clear from the above calculations that Rs 15,000 monthly investment for 25 years was able to generate a higher corpus than Rs 40,000 monthly investment for 10 years.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
