Which SIP strategy can build higher corpus in long term: Rs 30,000 for 5 Years vs Rs 5,000 for 30 Years?
Planning for retirement, buying a home, or securing your childrens education? Strategic SIP investments can make your financial goals a reality. But which approach will generate a higher corpus in the long run-investing Rs 30,000 monthly for 5 years or Rs 5,000 for 30 years? In this write-up, well explain, through calculations and show which strategy delivers the highest returns in the long term.
A Systematic Investment Plan (SIP) is a smart way to grow wealth by investing a fixed amount regularly in mutual funds. But one common dilemma many investors face is whether it’s better to invest a smaller amount over a longer period or a larger sum for a shorter time.
Let’s understand this concept through calculations and see which of the following two options will generate a higher corpus:
- Rs 30,000 SIP every month for 5 years.
- Rs 5,000 SIP every month for 30 years.
Here, we’ll see the potential growth of each strategy with varying return rates and explain how time and compounding play a significant role in building wealth.
How much corpus can you generate in 5 years with a Rs 30,000 monthly SIP?
At 12% Annualised Return Rate
With an annualised return rate of 12 per cent, you can accumulate approximately Rs 24.3 lakh in 5 years by investing Rs 30,000 every month.
Full Calculations for Rs 30,000 SIP over 5 Years (12% return rate):
- Total Investment: Rs 18,00,000
- Expected Capital Gain: 6,33,108
- Total Corpus: Rs 24,33,108
At 13% Annualised Return Rate
At a 13 per cent annual return, your investment grows to approximately Rs 24.9 lakh in 5 years.
Full Calculations for Rs 30,000 SIP over 5 Years (13% return rate):
- Total Investment: Rs 18,00,000
- Expected Capital Gain: Rs 6,94,106
- Total Corpus: Rs 24,94,106
At 14% Annualised Return Rate
At a 14 per cent annual return, your corpus could reach Rs 25.5 lakh in 5 years.
Full Calculations for Rs 30,000 SIP over 5 Years (14% return rate):
- Total Investment: Rs 18,00,000
- Expected Capital Gain: Rs 7,56,482
- Total Corpus: Rs 25,56,482
How much corpus can you generate in 30 years with a Rs 5,000 monthly SIP?
At 12% Annualised Return Rate
At an annualised return rate of 12 per cent, your Rs 5,000 monthly SIP will grow to approximately Rs 1.54 crore over 30 years.
Full Calculations for Rs 5,000 SIP over 30 Years (12% return rate):
- Total Investment: Rs 18,00,000
- Expected Capital Gain: Rs 1,36,04,866
- Total Corpus: Rs 1,54,04,866
At 13% Annualised Return Rate
With a 13 per cent annual return, your corpus could grow to approximately Rs 1.88 crore over 30 years.
Full Calculations for Rs 5,000 SIP over 30 Years (13% return rate):
- Total Investment: Rs 18,00,000
- Expected Capital Gain: Rs 1,70,07,595
- Total Corpus: Rs 1,88,07,595
At 14% Annualised Return Rate
At a 14 per cent return, you could accumulate about Rs 2.29 crore in 30 years with a Rs 5,000 monthly SIP.
Full Calculations for Rs 5,000 SIP over 30 Years (14% return rate):
- Total Investment: Rs 18,00,000
- Expected Capital Gain: Rs 2,11,98,103
- Total Corpus: Rs 2,29,98,103
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