Power of Rs 10,000 SIP: How large corpus can you generate on your Rs 10,000 SIP investment at 10%-15% in 20, 30 and 40 years?

Power of Compounding: The power of compounding rewards a long-term investor where the corpus grows faster with time. But if in the same duration, you get 1 per cent extra annualised return, your corpus from a monthly investment may not only by a few lakhs but it may be a few crores. Every percentage point matters in investment return. A slightly higher return may help you generate a higher corpus than your target, or it may also help you achieve the financial goal much earlier than your expected duration. Know how large corpus you may create from a Rs 10,000 monthly SIP investment if your corpus grows at 10%-15% in 20-40 years.

Power of compounding 

To explain the power of compounding, we take 2 examples. In the first, see how an Rs 10 lakh lump sum investment grows at a 12 per cent annualised return in 20 to 40 years.

In 20 years, expected capital gains will be Rs 86,46,293 and the estimated corpus will be Rs 96,46,293.

In 40 years, expected capital gains will be Rs 9,20,50,970 and the expected corpus will be Rs 9,30,50,970.

You can see how the power of compounding can transform an investment in the long run. Just in 20 years, the corpus grew by 8,34,04,677. This is the reward of staying in an investment for long.

In the second example see, what the estimated corpus will be if a Rs 10 lakh investment grows at a 12%-15% annualised return in 30 years.

At a 12 per cent annualised return, estimated capital gains will be Rs 2,89,59,922 and the estimated corpus will be Rs 2,99,59,922.

At a 13 per cent annualised return, estimated capital gains will be Rs 3,81,15,898 and the estimated corpus will be Rs 3,91,15,898.

At a 14 per cent annualised return, estimated capital gains will be Rs 4,99,50,159 and the estimated corpus will be Rs 5,09,50,159.

At a 15 per cent annualised return, estimated capital gains will be Rs 6,52,11,772 and the estimated corpus will be Rs 6,62,11,772.

You can see that the corpus grew more than double if the investor got a 15 per cent annualised return instead of 12 per cent.

Corpus from Rs 10,000 monthly SIP investment at different rates

Here, we will calculate how your Rs 10,000 monthly SIP may grow if the investor gets a 10%-15% annualised return in a 20-40 year period.

Rs 10,000 monthly SIP investment at 10%-15% return in 20 years

In the table, you can see that in 20 years, at 10% per cent, the total estimated corpus is Rs 72,39,867, while in 40 years, it is Rs 1,32,70,734.

The difference will be more starting as the duration increases.

Rs 10,000 monthly SIP investment at 10%-15% return in 30 years

In 30 years, at a 10 per cent annualised return, the estimated corpus generated is Rs 20,792,927, but at a 15 per cent annualised return, the estimated corpus will be Rs  56,317,704.

Now, see how the gap will widen in 40 years.

Rs 10,000 monthly SIP investment at 10%-15% return in 40 years

In 40 years, at a 10 per cent annualised return, the estimated corpus will be Rs 55,946,074, but at a 15 per cent annualised return, the estimated corpus will be Rs 230,466,705.

Conclusion

If one gets a higher return on the same investment, they can create a much larger corpus in the long run because of the power of compounding. 

(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)