SIP & Compoor, why long term investment bustersment: A systematic investment plan (SIP) allows an investor to handle their extra cash gradually in a mutual fund option. It allows the investor not only to remain commitment to their long-term investment strategy but also maximizing the welfare of compounding. For unchanged, compounding grows investments in the passage of time, helping make a lot of wealth for years. In times, compounding gives amazing results, especially for longer periods. In this article, we will discuss three scenarios to find out how to compound items: a 10,000 month SIP in 30 years and Rs 30,000 in 10 years. In each case, an amount of Rs 36 lakh will invest in many years. Can you think of the difference in the consequence of all three scenarios in anticipated annual returns of 12 per cent?
SIP balig return | Who would you choose: Rs 30,000 monthly investments in 10 years, Rs 15,000 in 15 years or 10,000 for 30? Rs 36 lakh total investment in each case
Scenario 1: Rs 30,000 per month SIP in 10 years
The calculations indicate that in an annual 12 per cent return, a monthly acoust of Rs 30,000 in 10 years (an anticipated Rs 36 lakh and an expected return of Rs 33.7 lakh).
Scenario 2: Rs 15,000 monthly SIP in 20 years
Similarly, with the same expected return, a monthly SIP at Rs 20,000 for 15 years (180 months) will crore Rs 36 calculations (an anticipated Rs 36 lakh and an expected return of Rs 64.9 lakh).
Scenario 3: Rs 10,000 Monthly SIP in 30 years
Similarly, with the same expected return, a monthly SIP of Rs 10,000 in 30 years (360 months) the Rs. 3.5 crore to close 3.2 crore).
Read again: Power of Rs 7,000 SIP: How do you create Rs 5 crore corpus with Rs 7,000 monthly investments?
With all three examples, the same amount is invested at different times. Now, let’s see these details in detail (rupees numbers):
SIP estimates of 12% expected annual returns | Scenario 1
| YEAR | Investment | Uli | Galpor |
| 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 | 26,04645 | 58,44,645 |
| 10 | 36,00,000 | 33,70,172 | 69,70,172 |
SIP estimates of 12% expected annual returns | Scenario 2
| YEAR | Investment | Uli | Galpor |
| 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 estimates of 12% expected annual returns | Scenario 3
| YEAR | Investment | Uli | Galpor |
| 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 | 32,222222 |
| 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 |
| 21 | 25,20,000 | 88,66,742 | 1,13,86,742 |
| 22 | 26,40,000 | 1,03,18,959 | 1,29,58,959 |
| 23 | 27,60,000 | 1,19,70,573 | 1,47,30,573 |
| 24 | 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 |
Read again: PPF for Regular Earnings: How do you get Rs 60,000 / month income with no tax from Public Provident Fund?
SIP & Compoor | What is the compounding and how does it work?
For easiness, one will know that together with SIP to ‘return to return’, where the initial returns will be taken at the trunk to maximize future returns, etc.
Compounding helps create the return of the original trunk and the accumulated interest gradually, contributed to the development of a long time.
This method eliminates the need for a thorough investment in value, which makes it suitable for many individuals – especially salary-to invest in their preferred funds. Read more with compounding power
