Kolkata: A SIP storm is sweeping the country. Despite volatility in the market following a correction in the earlier months, as many as 46 lakh new SIP accounts were added in April during the month, 14.4% higher than the 40.19 lakh SIPs added in March. The total inflow through SIP touched Rs 26,632 crore in April. This goes to demonstrate the financial discipline and maturity among common Indian investors.
The reason is not far to seek. A long-term investment into a performing equity-oriented scheme can bring huge fortunes to an individual, who has discipline and determination of pursuing long-term investing. Let’s do the calculation with a SIP calculator which are available online for free.
How much is 1000 SIP for 5 years?
Let’s begin with a simple calculation. If an individual invests a paltry Rs 1,000 a month for 5 years, the total value that will be generated in the account at a moderate return of 12% is Rs 82,486.37, out of which the out of pocket investment is Rs 60,000. As the investment horizon increases, the returns will keep rising ‘disproportionately’. If someone has the patience of investing the same amount for 10 years, the total amount will be Rs 2.32 lakh and will reach Rs 5.05 lakh in 15 years.
How much is Rs 50,000 SIP for 15 years?
Now let’s consider what an individual can accumulate with a significant monthly SIP of Rs 50,000 for 15 years. Let’s also keep the rate of interest steady at 12%. The amount will be nothing less than Rs 2.52 crore on an out of the pocket investment of Rs 90 lakh. Therefore, the returns will be Rs 1.61 crore.
Now let’s extend the investment for 20 years and 25 years. On a 20-year timeline, the total investment value comes to a whopping Rs 5 crore. If the investment goes on for another 5 years, the value accumulated will come to Rs 9.49 crore on an out of the pocket investment of Rs 1.50 crore only. The higher the time period, the higher the returns, thanks to the force of compounding. Note that thee are many mutual fund schemes which generate a higher rate of return than 12%. In that case the returns will even be higher.
(Disclaimer: This article is only meant to provide information. News9 does not recommend buying or selling shares or subscriptions of any IPO, Mutual Funds, precious metals, commodity, any form of alternative investment instruments and crypto assets.)
Systematic investment Plan, or SIP, is the common man’s way to creating wealth. The formidable force of compounding that it employs is able to create a very big sum from much smaller regular contributions. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
