Rs 3 Crore With Rs 5,000 SIP: Here’s How Long It Will Take

Systematic Investment Plan, or SIP, is perhaps the most effective strategy for long-term wealth accumulation. Investors can take advantage of the power of compounding by investing a predetermined amount into mutual funds on a regular basis using SIPs.

Even a small amount invested in SIP regularly can build a significant corpus over a long term.

Historically, equity mutual funds have produced average returns of around 12% annually. However, this does not determine future performance.

So how long will it take to build a Rs 3 crore corpus with Rs 5,000 monthly SIP?

For now, let’s assume a 12% average yearly return for computation’s sake.

M = P × ({[1 + i]^n – 1} / i) × (1 + i)

Where:

• M denotes the maturity value that you will receive.

• P is the amount of money that is invested.

• N shows the number of payments made.

• I denotes the interest rate.

Considering the above denominators, a Rs 5,000 monthly SIP with an annual rate of interest of 12% can reach Rs 3 crore in about 36 years.

Now, if you raise the rate of interest at 15% per year, it would take around 31 years to accumulate a corpus of Rs 3 crore.

Investing Rs 5,000 a month may not seem like a lot, but it shows how important starting early is. Investing early gives your money more time to grow. Over time, you can also try increasing your SIP amount. That way you can reach the goal of Rs 3 crore faster.

At the same time, it is also important to choose the right kind of funds. Before choosing any fund, you need to consider factors such as the returns generated by the fund, your ability to take risks and your financial objective. With perseverance, self-control and a long-term perspective, a SIP of Rs 5,000 can yield Rs 3 crore.

Remember, that even a small SIP can grow into a big amount over time with disciplined investing and the power of compounding.