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Compounding increases your returns on investment over time. Compounding means you are earning returns not just on your original investment but also on returns. In a systematic investment plan (SIP), compounding plays a very good role where you invest a fixed amount regularly. For example, if you put in Rs 10,000 annually at a rate of 5 per cent annualised return, after a year, you will have Rs 10,500 thanks to annual compounding. Compounding monthly will give you about Rs 10,511. If you start investing early in mutual funds through SIP, your money will be compounded for a longer period, leading to larger wealth accumulation. 

If you want to become a crorepati till retirement age, you need to start monthly SIPs as soon as possible. This article will talk about how much time it will take to generate a Rs 1 crore corpus till retirement time by doing Rs 5,000, Rs 10,000, Rs 15,000, Rs 20,000 and Rs 25,000 monthly SIPs. Before that, we will understand what SIP is, its benefits, and when you should start doing it. Take a look:

SIP is a popular way to invest in mutual funds by making fixed amount of contributions at regular intervals. The investment can be done daily, weekly, monthly, quarterly, half-yearly, and yearly. NAV (net asset value) represents a mutual fund's per-share market value.

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SIPs are considered a wonderful alternative for both new and seasoned investors looking to accumulate money over time.

If you start an SIP of Rs 5,000 per month now and invest for 27 years, then you will be able to accumulate Rs 1,08,11,565 (Rs 1.08 crore) fund at retirement. This means you need to start investing at the age of 33.

If you start an SIP of Rs 10,000 per month now and invest for 21 years, then you will be able to accumulate Rs 1,04,30,067 (Rs 1.04 crore) fund at retirement. This means you need to start investing at the age of 39.

If you start an SIP of Rs 15,000 per month now and invest for 18 years, then you will be able to accumulate Rs 1,06,75,929 (Rs 1.07 crore) fund at retirement. This means you need to start investing at the age of 42.

If you start an SIP of Rs 20,100 per month now and invest for 16 years, then you will be able to accumulate Rs 1,09,16,193 (Rs 1.09 crore) fund at retirement. This means you need to start investing at the age of 44.

If you start an SIP of Rs 25,000 per month now and invest for 14 years, then you will be able to accumulate Rs 1,03,38,502 (Rs 1.03 crore) fund at retirement. This means you need to start investing at the age of 46.

The above calculations are done on expectations of 12 per cent annual returns.

Investing in mutual funds is subject to market risks. Consult your advisor before making any investment.

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A senior sub-editor with Zee Business, Bhawna has an experience of almost a decade in writing and reporting in the financial industry. She has previously worked with companies like VCCi ...LATEST NEWSBy accepting cookies, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts.