SIP for Retirement Planning: How your Rs 33,000 monthly SIP for 5 years may be key to Rs 4,56,00,000 corpus by your 50th birthday

SIP for Retirement Planning: More than a large investment, retirement planning needs patience, where an investor can give their investment a long term to grow. If the investment horizon is long, a small investment can convert into a large corpus at a steady growth. In contrast, if an investor wants quick results from their equity investments, even a large investment for a short duration may give them ordinary results or may also turn negative. A long duration gives the benefit of the power of compounding in turning a small investment into a large corpus. Likewise, if you start a Rs 33,000 monthly SIP investment in an equity mutual fund for just 5 years, stop it, and sit back, and just let the amount grow for a long term, it may turn into an estimated corpus of Rs 4,56,00,000 by the time you turn 50. Know how it may be possible-

Power of compounding rewards long-term investors

Imagine you start an Rs 15,000 monthly SIP investment at 25 years of age and want to continue it for the next 35 years. The annualised return is 12 per cent. Just compare the growth in the first 30 years and the last 5 years.

In 30 years, the total investment will be Rs 54,00,000, estimated capital gains will be Rs 4,08,14,598, and the estimated corpus will be Rs 4,62,14,598.

But if you continue the same investment for another 5 years, the total investment will be Rs 63,00,000, but estimated capital gains will jump to Rs 7,63,62,467, and the estimated corpus will soar to Rs 8,26,62,467.

You can see that in the last 5 years, the extra investment is just Rs 9,00,000, but the extra estimated corpus generated is Rs 3,55,47,869.

This is the power of compounding. It shows its impact in the long duration.

What your Rs 33,000 SIP investment may do

If you start an Rs 33,000 SIP investment for 5 years and get a 12 per cent annualised return on it, your estimated capital gains will be Rs 19,80,000, and the estimated corpus will be Rs 26,76,419.

This is how the investment will look in 5 years.

How it may grow to Rs 4.56 cr corpus

From here on, you stop investing in SIP and just let the corpus grow without making any withdrawals for the next 25 years. You are investing no money, but your corpus is increasing as the fund is growing. If this investment grows at a 12 per cent annualised return for the next 25 years, the estimated capital gains earned from it will be Rs 4,28,22,876, and the estimated corpus will be Rs 4,54,99,295.

So, if you start SIP investment at 20 years of age, you may have that corpus by 50 years of age.

This is how your investment is likely to grow!

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