SIP in early age :Financial advisors often say that if you want to see the real power of compounding on your investment, then start investing as soon as possible. At the same time, your investment goal should be for the long term. A recent research report released by Funds India Research said that if an investor starts SIP at the age of 20, then there are chances of his money growing 100 times at the age of 60 i.e. on retirement. In this research, the annualized return on SIP investment has been considered to be 12 percent.
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The research also says that if you start investing late, you have to spend more money to achieve your goals and the returns are also less as compared to the investment. For example, if you start investing at the age of 30, your money will grow 30 times at the age of 60, whereas if you start investing at the age of 40, your wealth will grow only 10 times. For now, you can achieve even the biggest goals by starting investing at a young age (Start your SIP early).
Now the question arises that if there is a plan to create a corpus of Rs 5 crore on retirement, then how much SIP will have to be done every month. In this, we have calculated on the basis of different ages.
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SIP : Investing at the age of 20
Monthly SIP: Rs 4250
Annual Return: 12%
Duration: 40 years
Value of SIP after 40 years: Rs 5,05,00,286 (around Rs 5 crore)
Total investment in 40 years: Rs 20,40,000 (around Rs 20.50 lakh)
Return on total investment: 25 times
SIP: Investing at the age of 25
Monthly SIP: Rs 7750
Annual return: 12%
Duration: 35 years
Value of SIP after 35 years: Rs 5,03,38,335 (around Rs 5 crore)
Total investment in 35 years: Rs 32,55,000 (around Rs 32.55 lakh)
Return on total investment: 15.5 times
SIP : Investing at the age of 30
Monthly SIP: Rs 14250
Annual return: 12%
Duration : 30 years
Value of SIP after 30 years: Rs 5,03,01,271 (around Rs 5 crore)
Total investment in 30 years: Rs 51,30,000 (around Rs 51 lakh)
How many times the return of total investment: About 10 times
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SIP: Investing at the age of 40
Monthly SIP: Rs 50,000
Annual Return: 12%
Duration : 20 years
Value of SIP after 20 years: Rs 4,99,57,396 (around Rs 5 crore)
Total investment in 20 years: Rs 1,20,00,000 (around Rs 1.20 crore)
How many times the return of total investment: About 5.15 times
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You can see the benefit of investment soon
Here you can see the benefits of investing at a young age. If the target is to get a fund of 5 crores on retirement and you start SIP in 20 years, then you will have to do SIP of Rs 4250 every month. At the same time, you are getting 25 times the profit on the total investment made by you.
If you start SIP at the age of 25, you will need a monthly SIP of Rs 7750 and you will get a profit of about 16 times the total investment made by you.
If you start it at the age of 30, you will have to deposit Rs 142509 monthly and you will get 10 times the profit on the total investment made by you.
Whereas if you start at the age of 40, you will need Rs 50,000 per month and you are getting less than 5 times the return on your total investment.
(source: sip calculator, FundsIndia Research)
