SIP calculates an annual return of 12%: 10 years, 10 years, 10 years, 20,000, 20 or 30 rupees, which can make you a Cliopati?
SIP&Compound, Why Long-term Investment Is Important: A systematic investment plan (SIP) enables investors to gradually transfer their surplus cash to a shared choice of funds. It allows investors not only to stick to their long-term investment strategies, but also to maximize the benefits of compounding. For unproven, complex investments multiplied over time, helping to create a lot of wealth over the years. Sometimes, compounding produces surprising results, especially over longer periods of time. In this article, let’s consider the following three situations to understand the time in the compounding: 30 years of 10,000 rupees per month, enjoy 20 years of 15,000 rupees for 20 years, lasting 20 years of 10 years of 30,000 rupees. In each case, Rs 3.6 lakh will be invested over the years. Can you guess the difference in the results in all three cases, with an expected annualized return of 12%?
SIP Return Estimate | Which one would you choose: 10 years of investment of Rs 30,000 per month, 15 years of Rs 15,000, or 30 years of Rs 10,000? Total investment of Rs 3.6 lakh in each case
Plan 1: 30,000 rupees per month for 10 years
Calculations show that at a 12% annual rate of return, a monthly sip rise to Rs 30,000 for 10 years (120 months), would result in a corpus of about Rs 69.7 lakh (principal of Rs 36 lakh and expected Rs 33.7 lakh).
Plan 2: Rs 15,000 per month for 20 years
Similarly, on calculations, a sip of sip per month for 15 years (180 months) over the same expected rate of return will accumulate about Rs 10 crore of wealth (by calculations, principal of Rs 36 crore and expected return of Rs 64.9 crore).
Plan 3: 30 years per month
Similarly, on the same expected rate of return, a 30-year (360 months) monthly sip of a drink will accumulate wealth to Rs 350 crore gains (principal of Rs 36 lakh and expected nearly Rs 32 crore) per month.
Also read: 7,000 rupees of electricity: How to generate a corpus of Rs 5 crore with an investment of Rs 7,000 per month?
In all three examples, the same amount is invested on different schedules. Now, let’s look at these estimates in detail (numbers of Rs):
SIP estimated at 12% expected annual return | Scheme 1
| Year | invest | return | Corpus |
| 1 | 3,60,000 | 24,280 | 3,84,280 |
| 2 | 7,20,000 | 97,296 | 8,17,296 |
| 3 | 10,80,000 | 2,25,229 | 13,05,229 |
| 4 | 14,40,000 | 4,15,045 | 18,55,045 |
| 5 | 18,00,000 | 6,74,591 | 24,74,591 |
| 6 | 21,60,000 | 10,12,711 | 31,72,711 |
| 7 | 25,20,000 | 14,39,370 | 39,59,370 |
| 8 | 28,80,000 | 19,65,797 | 48,45,797 |
| 9 | 32,40,000 | 26,04,645 | 58,44,645 |
| 10 | 36,00,000 | 33,70,172 | 69,70,172 |
SIP estimated at 12% expected annual return | Scheme 2
| Year | invest | return | Corpus |
| 1 | 2,40,000 | 16,187 | 2,56,187 |
| 2 | 4,80,000 | 64,864 | 5,44,864 |
| 3 | 7,20,000 | 1,50,153 | 8,70,153 |
| 4 | 9,60,000 | 2,76,697 | 12,36,697 |
| 5 | 12,00,000 | 4,49,727 | 16,49,727 |
| 6 | 14,40,000 | 6,75,141 | 21,15,141 |
| 7 | 16,80,000 | 9,59,580 | 26,39,580 |
| 8 | 19,20,000 | 13,10,531 | 32,30,531 |
| 9 | 21,60,000 | 17,36,430 | 38,96,430 |
| 10 | 24,00,000 | 22,46,782 | 46,46,782 |
| 11 | 26,40,000 | 28,52,296 | 54,92,296 |
| 12 | 28,80,000 | 35,65,043 | 64,45,043 |
| 13 | 31,20,000 | 43,98,623 | 75,18,623 |
| 14 | 33,60,000 | 53,68,359 | 87,28,359 |
| 15 | 36,00,000 | 64,91,520 | 1,00,91,520 |
SIP estimated at 12% expected annual return | Scheme 3
| Year | invest | return | Corpus |
| 1 | 1,20,000 | 8,093 | 1,28,093 |
| 2 | 2,40,000 | 32,432 | 2,72,432 |
| 3 | 3,60,000 | 75,076 | 4,35,076 |
| 4 | 4,80,000 | 1,38,348 | 6,18,348 |
| 5 | 6,00,000 | 2,24,864 | 8,24,864 |
| 6 | 7,20,000 | 3,37,570 | 10,57,570 |
| 7 | 8,40,000 | 4,79,790 | 13,19,790 |
| 8 | 9,60,000 | 6,55,266 | 16,15,266 |
| 9 | 10,80,000 | 8,68,215 | 19,48,215 |
| 10 | 12,00,000 | 11,23,391 | 23,23,391 |
| 11 | 13,20,000 | 14,26,148 | 27,46,148 |
| 12 | 14,40,000 | 17,82,522 | 32,22,522 |
| 13 | 15,60,000 | 21,99,311 | 37,59,311 |
| 14 | 16,80,000 | 26,84,180 | 43,64,180 |
| 15 | 18,00,000 | 32,45,760 | 50,45,760 |
| 16 | 19,20,000 | 38,93,782 | 58,13,782 |
| 17 | 20,40,000 | 46,39,208 | 66,79,208 |
| 18 | 21,60,000 | 54,94,392 | 76,54,392 |
| 19 | 22,80,000 | 64,73,254 | 87,53,254 |
| 20 | 24,00,000 | 75,91,479 | 99,91,479 |
| twenty one | 25,20,000 | 88,66,742 | 1,13,86,742 |
| twenty two | 26,40,000 | 1,03,18,959 | 1,29,58,959 |
| twenty three | 27,60,000 | 1,19,70,573 | 1,47,30,573 |
| twenty four | 28,80,000 | 1,38,46,872 | 1,67,26,872 |
| 25 | 30,00,000 | 1,59,76,351 | 1,89,76,351 |
| 26 | 31,20,000 | 1,83,91,120 | 2,15,11,120 |
| 27 | 32,40,000 | 2,11,27,362 | 2,43,67,362 |
| 28 | 33,60,000 | 2,42,25,847 | 2,75,85,847 |
| 29 | 34,80,000 | 2,77,32,516 | 3,12,12,516 |
| 30 | 36,00,000 | 3,16,99,138 | 3,52,99,138 |
Also read: PPF’s regular income: How do you get tax-free income of Rs 60,000 from public provident fund?
sip&Composite|What is Composite and how does it work?
For simplicity, one can understand compounding in SIP as “return return”, where the initial gains will add up to the supervisor to improve future returns, and so on.
Compounding helps gradually yield returns on the original principal and accumulated interest over time, thereby increasing exponential growth over a longer period of time.
This approach eliminates the need for one-time investments, which has led many people, especially those who are paid, to invest in their preferred mutual funds. Read more about Compound Power
