SIP Calculator ₹500 & ₹1000 Monthly Investment: Many people think that thousands and lakhs of rupees are required to create a big fund, but the truth is that just ₹500 or ₹1,000 saved from pocket money a month can create a corpus worth lakhs in the long run. Understand its complete mathematics
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Mutual Fund SIP Return Calculation: Amidst the uncertainties of the stock market, Systematic Investment Plan (SIP) in mutual funds has become the easiest and safest means of wealth creation for common investors. People often think that building a big fund requires thousands and lakhs of rupees, but the truth is that just ₹500 or ₹1,000 a month saved from pocket money can create a corpus worth lakhs over a long period of time.
The power of compounding and the benefit of rupee cost averaging in mutual funds together make your small investment big. Let us understand how much a SIP of ₹500 and ₹1,000 will generate over 10, 15 and 25 years, assuming an average annual return of 12%.
How much fund will be created from monthly SIP of ₹ 500?
If you do a SIP of only ₹500 every month, which is approximately ₹16-17 per day, then your calculation for an average annual return of 12% would be something like this:
After 10 years-
Total investment: ₹60,000
Estimated Returns: ₹56,169
Total funds: ₹1,16,169 (approximately Rs 1.16 lakh)
After 15 years-
Total investment: ₹90,000
Estimated Returns: ₹1,62,288
Total funds: ₹2,52,288 (approximately Rs 2.52 lakh)
After 25 years-
Total investment: ₹1,50,000
Estimated Returns: ₹7,98,807
Total funds: ₹9,48,807 (approximately Rs 9.50 lakh)
How much fund will be created from a monthly SIP of ₹ 1,000?
If you increase your investment to ₹33 a day, or ₹1,000 a month, your return more than doubles at an average annual return of 12%:
Power of Compounding: More the time, bigger the corpus
It is clear from the above figures that the timing of investment matters more than the amount of investment. In a SIP of ₹1,000, the total amount left in your pocket in 25 years is just ₹3 lakh. But due to compounding, the returns you get are more than ₹15.97 lakh, making the total fund around ₹19 lakh.
Keep these things in mind while starting SIP
The younger you start investing, the greater the benefit of compounding. As your income increases, increase your SIP amount by 5% or 10% every year. With this your fund will grow much sooner than expected. Don’t stop your SIP due to market fluctuations. In times of recession, you get more units, which gives you a big advantage when there is a boom.
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