SIP Calculator: If you want strong financial security for the future, then SIP investment in mutual funds is an excellent option. If a small monthly amount is invested for a long time, then it creates a fund of lakhs with the power of compounding. This is the reason that a target of Rs 25 lakh can be achieved even with a simple SIP of Rs 5,000.
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How does money grow with SIP?
The whole game of SIP, i.e., Systematic Investment Plan, is based on compounding. In this, your investment earns interest on increasing interest and on interest. The longer you give to the investment, the faster your capital will grow. In the stock market, an average return of 10% to 15% can be obtained in the long run, and this is what makes it attractive for investors.
Calculation on different returns
If we assume that SIP gives a return of 10% per annum, then it will take about 20 years to create a fund of 25 lakhs from Rs 5,000 per month. But if a 12% return is achieved, then the time will be reduced to about 17 years. At the same time, in case of a 15% return, this target of 25 lakhs can be achieved in just 15 years.
How to get 25 lakhs quickly
If investors want to achieve this target quickly, then there are two ways for this. First, increase the amount of SIP. Like start with Rs 7,000 or 10,000 instead of 5,000. Second, adopt the step-up option in SIP. If you increase your SIP amount by 10% every year, then a fund of 25 lakhs can be created in just 12–13 years.
SIP calculation example
If a monthly SIP of Rs 5,000 gives a 12% annual return, then a corpus of about Rs 11.6 lakh will be ready in 10 years, about Rs 25.1 lakh in 15 years, and about Rs 49.9 lakh in 20 years.
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What to pay attention to before investing
SIP is the most effective means for long-term investment, but patience is very important in this. The sooner you start, the more benefits you will get. However, keep in mind that the value of 25 lakhs can be reduced significantly after 15-20 years due to inflation. Therefore, include inflation while setting the goal. Choose the right mutual fund and consult a financial advisor if needed. Also, review your portfolio every year so that the investment keeps growing in the right direction.