How much will a person earn with ₹5,000 monthly SIP in 10, 20 & 30 years?
The importance of investing in a Systematic Investment Plan (SIP) cannot be overstated. Investing a fixed amount of money regularly in the stock market or other financial instruments can help you achieve your long-term financial goals. The power of compounding can work wonders for your investments, and a small investment of ₹5,000 per month can lead to significant returns over a period of time.
In this blog post, we will explore how much a person can earn with a monthly SIP of ₹5,000 in 10, 20, and 30 years, assuming a consistent rate of return of 15% per annum.
10-year SIP:
According to SEBI’s SIP calculator, a person investing ₹5,000 monthly in a SIP at 15% per annum will earn ₹13.76 lakh in 10 years, with a total investment value of ₹6 lakh. This means that the returns earned on the investment will be around ₹7.76 lakh.
20-year SIP:
In 20 years, the same investment will give a return of ₹74.86 lakh with a total investment value of ₹12 lakh. This means that the returns earned on the investment will be around ₹62.86 lakh.
30-year SIP:
The investment would fetch ₹3.46 crore in 30 years. The total investment value would be ₹18 lakh, with returns of ₹3.28 crore.
These numbers are based on a consistent rate of return of 15% per annum, which is an ambitious target. However, even if the returns are lower, the power of compounding will still work in your favor.
The Magic of Compounding:
The power of compounding is a powerful force that can help your investments grow over time. It is the concept of earning interest on both the principal amount and the accrued interest. This means that the returns earned on your investment are added to the principal amount, and then the interest is calculated on the new total.
For example, if you invest ₹5,000 per month for 10 years, the total investment value will be ₹6 lakh. However, the returns earned on the investment will be around ₹7.76 lakh. This means that the total amount you will have is ₹13.76 lakh.
Consistency is Key:
The key to making SIPs work is consistency. You need to invest a fixed amount of money regularly, without fail, to take advantage of the power of compounding. Even if the returns are lower than expected, the consistent investment will help your money grow over time.
Conclusion:
Investing ₹5,000 monthly in a SIP at 15% per annum can lead to significant returns over a period of time. The numbers above show that a 10-year SIP can fetch returns of around ₹7.76 lakh, a 20-year SIP can fetch returns of around ₹62.86 lakh, and a 30-year SIP can fetch returns of around ₹3.28 crore.
The power of compounding is a powerful force that can help your investments grow over time. Consistency is key, and you need to invest a fixed amount of money regularly to take advantage of the power of compounding.
Source:
