Rs 11,000 Monthly SIP: Year-By-Year Corpus Growth To Rs 1 Crore

Compounding is one of the most powerful tools an investor can use when it comes to building long-term wealth. Combine that principle with Systematic Investment Plans (SIPs) in mutual funds, and you have a remarkably simple, yet effective way of reaching your financial goals. With a disciplined approach and long-term investment strategy, you can build a large corpus through SIPs for retirement planning, buying a house or funding your child’s education.

In essence, compounding means earning returns not only on your principal amount but also on the returns generated periodically, generally every month or a year. This produces a snowball effect, allowing your money to grow faster. The longer you remain invested, the higher the returns. As such, investment duration plays a crucial role in long-term wealth creation.

If you are planning to build a corpus of Rs 1 crore with a modest investment of Rs 11,000 per month, let’s see how an SIP could be helpful in reaching the crorepati goal.

Traditionally, equity mutual SIPs have given average annual returns of 12% over long-term horizons. Suppose you want to create a corpus of Rs 1 crore with an SIP of Rs 11,000 every month. Here’s how your investment can potentially grow at an assumed interest rate of 12% per annum.

• Monthly investment: Rs 11,000

• Tenure: 20 years

• Total investment: Rs 26.4 lakh  

• Expected rate of return: 12% per annum

• Estimated returns: Rs 83.5 lakh

• Maturity corpus: Rs 1.09 crore

Even a modest investment of Rs 11,000 per month in an SIP can help you realise your dream crorepati goal in nearly two decades. As the calculation indicates, you can conveniently reach the target of Rs 1 crore in 20 years at an assumed interest rate of 12% per annum.   

The total principal you would invest over this period amounts to Rs 26.4 lakh. The compounding returns on this investment would add to Rs 83,50,627, bringing the total corpus to Rs 1,09,90,627.

The above calculation clearly shows the power of compounding in building a large corpus in the long run. Relatively small, regular investments, if maintained over an extended horizon, can grow into a substantial amount. It makes a case for starting early, being consistent and giving your money the time it needs to grow exponentially. You can even take the help of an online SIP calculator to see the projected growth path for your investments.

A Systematic Investment Plan (SIP) allows investing a fixed amount of money at regular intervals into a mutual fund scheme. Beyond managing market ups and downs, SIPs make compounding work for you. Even small investments grow big over time. Each SIP instalment earns returns that are reinvested to earn more. And the longer you stay invested, the more your wealth multiplies, making disciplined investing a simple way to build long-term savings. 

As SIP investments are linked to market risks, it’s advisable to consult a financial expert to build a robust investment strategy for an ambitious goal of accumulating Rs 1 crore.