Starting retirement savings early and committing to a disciplined SIP strategy significantly boosts wealth over time. With consistent monthly investment through SIP, one can become a crore Pati in a very short time.
In any savings or investment plans, starting early is key to build a large corpus. The same is true for mutual investment as compounding benefit accrues only when money is given time to grow. Compounding means you first allow your actual investment to work and generate returns and later the return on investment also fetches you further returns. Over time, this leads to exponential growth. This is the reason mutual funds are able to generate enormous wealth for investors, either through lump sum or SIP investments.
In this story, we will try to understand how long it takes to build a retirement corpus of Rs 1 crore by investing Rs 10,000 per month in a systematic investment plan (SIP). Here we will do calculations based on 10%, 12% and 14% annualised rate of return on investment. Past trends in respect of returns on mutual fund SIP suggest that 10-14% CAGR is moderate and can be easily achieved.
Let’s look at how an investor aged 25, investing Rs 10,000 every month, could reach Rs 1 crore at different return rates. We are exploring 10%, 12% and 14% annual returns to see how each impacts the timeline.
At 10% annualized return in SIP
Time to reach Rs 1 crore: 22.5 years (age 47.5 years)
Total investment: Rs 27 lakh
Estimated gains: Rs 74.64 lakh
Total corpus in 22.5 years: Rs 1.02 crore
So this 25-year old can be a crore Pati in 22.5 years by investing Rs 10,000 per month in mutual funds through SIP, earning 10% annualised return.
At 12% annualized return in SIP
Time to reach Rs 1 crore: 20 years (age 45 years)
Total investment: Rs 24 lakh
Estimated returns: Rs 76 lakh
Total corpus: Rs 1 crore
At 12% annualised return on Rs 10,000 SIP investment, the Rs 1 crore retirement goal can be achieved in 20 years.
At 14% annualized return in SIP
Time to reach Rs 1 crore: 18.5 years (age 43.5 years)
Total investment: Rs 22.2 lakh
Estimated returns: Rs 83 lakh
Total corpus: Rs 1.05 crore
At a 14% return, the investor reaches Rs 1 crore corpus goal in just 18.5 years.
With these examples, it’s clear that starting retirement savings early and committing to a disciplined SIP strategy significantly boosts wealth over time. With consistent monthly investment through SIP, one can become a crore Pati in a very short time.
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This blog is purely for educational purposes. Mutual fund investments are subject to market risks, read all scheme-related documents carefully.
