How much will a person earn with ₹5,000 monthly SIP in 10, 20 & 30 years?
Investing in a Systematic Investment Plan (SIP) is an excellent way to build wealth over time. With a fixed amount invested regularly, individuals can take advantage of the power of compounding and earn significant returns. But how much can one earn with a monthly SIP investment of ₹5,000? Let’s find out.
According to a recent article on Financial Express, a person investing ₹5,000 monthly in a SIP at a rate of 15% per annum will earn significant returns over the years. The article uses SEBI’s SIP calculator to provide a breakdown of the returns over different time periods.
10-year SIP
Investing ₹5,000 monthly for 10 years at 15% per annum will give you a total return of ₹13.76 lakh. This means that your total investment value will be ₹6 lakh, and the returns will be ₹7.76 lakh. This is an impressive 128% return on your investment.
20-year SIP
Investing ₹5,000 monthly for 20 years at 15% per annum will give you a total return of ₹74.86 lakh. This means that your total investment value will be ₹12 lakh, and the returns will be ₹62.86 lakh. This is an outstanding 523% return on your investment.
30-year SIP
Investing ₹5,000 monthly for 30 years at 15% per annum will give you a total return of ₹3.46 crore. This means that your total investment value will be ₹60 lakh, and the returns will be ₹2.86 crore. This is an astonishing 5,720% return on your investment.
As you can see, the longer you invest, the more significant the returns. This emphasizes the importance of starting early and being consistent with your investments.
Why is this possible? The answer lies in the power of compounding. Compounding occurs when the returns on your investment are reinvested, allowing them to earn returns themselves. This creates a snowball effect, where the returns grow exponentially over time.
For example, in the 30-year SIP scenario, the returns in the first 10 years are ₹13.76 lakh. These returns are then reinvested, earning returns themselves. In the next 10 years, the returns grow to ₹74.86 lakh, and so on. This is why the returns are so significant in the 30-year scenario.
Key Takeaways
- Investing ₹5,000 monthly in a SIP at 15% per annum can give you significant returns over the years.
- The longer you invest, the more significant the returns.
- Compounding is the key to achieving these returns, as it allows the returns to earn returns themselves.
- Starting early and being consistent with your investments is crucial to achieving these returns.
Conclusion
Investing in a SIP is an excellent way to build wealth over time. With a fixed amount invested regularly, individuals can take advantage of the power of compounding and earn significant returns. As shown in this article, investing ₹5,000 monthly in a SIP at 15% per annum can give you returns of ₹13.76 lakh in 10 years, ₹74.86 lakh in 20 years, and ₹3.46 crore in 30 years.
Remember to start early, be consistent, and take advantage of the power of compounding to achieve your financial goals.
