How much will a person earn with ₹5,000 monthly SIP in 10, 20 & 30 years?
Saving and investing for the future is a crucial aspect of personal finance. With the increasing awareness about the importance of financial planning, many individuals are turning to Systematic Investment Plans (SIPs) as a viable option to grow their wealth. A SIP allows you to invest a fixed amount of money at regular intervals, which helps you to ride out market fluctuations and achieve your long-term financial goals.
Recently, a news article highlighted the potential of a ₹5,000 monthly SIP in achieving financial freedom. According to the article, a person investing ₹5,000 monthly in a SIP at a rate of 15% per annum will earn a significant amount in the long run. But just how much can you earn with such an investment? In this blog post, we will explore the potential returns of a ₹5,000 monthly SIP over 10, 20, and 30 years.
10-year SIP: A decent start
According to SEBI’s SIP calculator, a ₹5,000 monthly SIP at 15% per annum for 10 years will yield a return of ₹13.76 lakh. This is not a bad start, especially considering the total investment amount is limited to ₹6 lakh. This means that your investment has more than doubled in value over the 10-year period, with an annualized return of around 15%.
20-year SIP: The power of compounding
As the investment period increases, the returns also grow exponentially. A ₹5,000 monthly SIP at 15% per annum for 20 years will yield a return of ₹74.86 lakh. This is a significant jump from the 10-year return, and the total investment amount has increased to ₹12 lakh. The power of compounding is evident here, as the returns have grown by more than five times in just 10 years.
30-year SIP: The magic of long-term investing
The longer the investment period, the more dramatic the returns. A ₹5,000 monthly SIP at 15% per annum for 30 years will yield a staggering return of ₹3.46 crore. This is a life-changing amount, and the total investment amount has increased to ₹18 lakh. The annualized return over this period is around 15.5%, which is impressive considering the time frame.
Key takeaways
From these examples, it is clear that the power of SIPs lies in their ability to generate significant returns over the long term. Here are a few key takeaways to keep in mind:
- Start early: The earlier you start your SIP, the more time your money has to grow. Even small investments can add up to significant amounts over time.
- Be consistent: Consistency is key when it comes to SIPs. Try to invest the same amount every month to take advantage of the power of compounding.
- Choose the right investment: Select a fund that aligns with your risk tolerance and investment goals. A 15% per annum return may not be possible in all markets, so it’s essential to choose a fund that can deliver consistent returns over the long term.
- Don’t touch the investment: One of the biggest mistakes people make is withdrawing from their SIPs during market downturns. Resist the temptation to withdraw your investment, as this can lead to significant losses.
Conclusion
In conclusion, a ₹5,000 monthly SIP at 15% per annum can generate significant returns over the long term. Whether you’re looking to achieve financial freedom in 10, 20, or 30 years, a SIP can help you get there. Remember to start early, be consistent, choose the right investment, and avoid withdrawing from your SIP during market downturns. With discipline and patience, you can achieve your financial goals and build a secure financial future.
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