Savings and safe investments are quite important for a secure future. It is often believed that a huge sum of money is needed to invest in order to earn significant interest. In reality, building a sizeable investment corpus does not always require a large income or a substantial lump-sum investment.
For investors with a long-term horizon, even small, regular contributions can potentially grow into a significant amount through the power of compounding. For instance, setting aside Rs 200 every day towards a SIP works out to approximately Rs 6,000 a month. If this investment is continued for 20 years and earns an assumed average annualised return of 12%, the potential corpus could be substantial, over Rs 60 lakh.
A Systematic Investment Plan (SIP) allows investors to invest a fixed amount at regular intervals in mutual fund schemes. Some mutual fund platforms also offer daily SIP options, allowing investors to spread their contributions across smaller, more frequent investments.
Also Read: Planning To Retire At 50? Here's The Monthly SIP Needed For A Rs 10 Crore Corpus
How Do Daily SIPs Help?
Daily SIPs offer investors a flexible and affordable way to maintain investment discipline. Regular investing also means that investments are made across different market levels, allowing investors to benefit from rupee-cost averaging.
Over a long period, the returns generated on the investment can themselves earn returns, allowing compounding to play a larger role in wealth creation. However, mutual fund returns are market-linked and are not guaranteed.
Breakdown of the 20-Year Investment
Let's assume an investment of Rs 200 daily for 20 years at an average annual return of 12%:
Daily Investment: Rs 200
Monthly Equivalent: Approx. Rs 6,000
Assumed Annual Return: 12% per year
Investment Duration: 20 years
Total Amount Invested: Rs 14.60 lakh
Estimated Returns: Rs 46.36 lakh
Total Expected Corpus: Rs 60.96 lakh
Also Read: This Rs 25,000 Step-Up SIP Strategy Could Help You Retire With Rs 10 Crore Corpus
As per the above calculation, investing Rs 200 a day through a systematic investment plan (SIP) for 20 years can build a total maturity corpus of roughly Rs 60.96 lakh.
Out of this final amount, your total invested amount will be Rs 14.60 lakh, while estimated returns from compounding are Rs 46.36 lakh based on 12% returns.
With an increase in your income, you can also raise the amount of the daily SIP to reach the goal faster.
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