Retirement Planning: Want Rs 5 crore corpus in 25 years? Know how much you need to invest one time, daily, monthly, and yearly
Power of Compounding: One can create a sizeable corpus by investing through a Systematic Investment Plan (SIP) on a daily, weekly, monthly, quarterly, half-yearly, or yearly basis. They may choose the investment period that suits their income cycle.
Power of Compounding: When you aim at creating a sizeable corpus, you may feel disappointed if your investment amount is low. You may think that if you start investing with a small amount, you may not be able to build a large corpus. But that's not the case. You can create a sizeable corpus even if you start with a small investment amount because of the power of compounding. You may opt for daily, weekly, monthly, quarterly, half-yearly, or yearly investment to achieve this target. Know about different types of mutual fund SIP investments, and what can be the estimated investment if one wants to create a Rs 5 crore corpus in 25 years through daily, weekly, monthly, quarterly, half-yearly, or yearly SIPs, or a one-time (lump sum) investment.
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(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)
What is SIP investment?
It's a way to invest in a mutual fund where one can invest a fixed amount every investment cycle. The investor gets compound growth on their investment. They can increase their SIP amount when their income rises.
SIP duration
Mutual fund houses offer SIPs of different durations. An SIP can be daily, weekly, monthly, quarterly, half-yearly, or yearly. One can select it based on their income cycle.
What is minimum SIP amount?
The minimum SIP investment amount offered by some mutual fund houses is Rs 100. The daily SIP amount can be less than that. Most mutual funds offer Rs 500 as the minimum SIP investment.
What are compound returns?
In compound returns, an investor gets returns on the growth along with the principal amount. In the long term, this process of earning return on return triggers the exponential growth of investments.
Compounding in SIP investment
Every SIP investment provides compound growth. E.g., if an investor opts for a monthly SIP investment in a mutual fund, they will get 12 compoundings in a year. Older SIPs will grow more in value compared to new SIPs because they will get more compound growth.
Example of compounding in SIP
If an investor invests Rs 6,000 monthly through SIP in a mutual fund and gets a 12 per cent return on this investment, let's see how their investment may grow in 10, 20, 30, and 40 years.
In 10 years, the investment will be Rs 7,20,000, estimated capital gains will be Rs 6,74,034, and the estimated corpus will be Rs 13,94,034.
In 20 years, the investment will be Rs 14,40,000, estimated capital gains will be Rs 45,54,888, and the estimated corpus will be Rs 59,94,888.
Example of compounding in SIP
In 30 years, the investment will be Rs 21,60,000, estimated capital gains will be Rs 1,90,19,483, and the estimated corpus will be Rs 2,11,79,483.
In 40 years, the investment will be Rs 28,80,000, estimated capital gains will be Rs 6,84,14,521, and the estimated corpus will be Rs 7,12,94,521.
Here, you can see that every 10 years, the fund is growing faster because the investor is getting compound growth on their investment.
Rs 5 crore corpus calculation
We will show that if an investor is aiming for a Rs 5 crore corpus in 25 years, what may be their daily, weekly, monthly, quarterly, half-yearly, and yearly SIP investment at a 12 per cent annualised growth. We will also show the lump sum investment to achieve the same goal at 12 per cent annualised growth.
Weekly SIP amount needed to get Rs 5 cr in 25 years
The estimated weekly amount will be Rs 6,053.72.
Total investment will be Rs 78,69,834.91, and the estimated capital gains will be Rs 4,21,30,165.09.
Monthly SIP amount needed to get Rs 5 cr in 25 years
The estimated monthly amount will be Rs 26,348.59.
Total investment will be Rs 79,04,575.57, and the estimated capital gains will be Rs 4,20,95,424.43.
Quarterly SIP amount needed to get Rs 5 cr in 25 years
The estimated quarterly amount will be Rs 79,935.24.
Total investment will be Rs 79,93,523.78, and the estimated capital gains will be Rs 4,20,06,476.22.
Half-yearly SIP amount needed to get Rs 5 cr in 25 years
The estimated half-yearly amount will be Rs 1,62,466.34.
Total investment will be Rs 81,23,316.92, and the estimated capital gains will be Rs 4,18,76,683.08.
Yearly SIP amount needed to get Rs 5 cr in 25 years
The estimated yearly amount will be Rs 3,34,820.08.
Total investment will be Rs 83,70,502.02, and the estimated capital gains will be Rs 4,16,29,497.98.
Lump sum amount required to get Rs 5 cr in 25 years
The estimated lump sum amount will be Rs 51,83,338.25.
Estimated capital gains will be Rs 4,48,16,661.75.