Rs 5,000 Monthly SIP For 20 Years: How Much Wealth Can You Build? Know Here
SIP for 20 Years: A Smart Way to Achieve Financial Goals
In today’s financial environment, it’s crucial to save with a clear purpose in mind—whether for a child’s education, retirement, or other life goals. Setting specific targets helps guide your savings and ensures you’re on track to meet them. One fundamental principle experts often stress is “Income minus Savings equals Expenses.” This approach puts saving first, prioritizing it before spending. However, many people fall into the trap of spending first and saving what remains. Shifting this mindset can increase the likelihood of meeting long-term financial goals.
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Take, for example, a monthly SIP (Systematic Investment Plan) of Rs 5,000 invested in an equity mutual fund with an expected return of 12% annually. After 20 years, this investment could potentially grow to Rs 50 lakh, with Rs 12 lakh being the original contribution and the rest being the gains. If you double the contribution to Rs 10,000 per month, the accumulated amount could reach nearly Rs 1 crore in the same time frame.
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If the investment period is extended to 25 years, the returns become even more significant. With Rs 5,000 invested monthly, the corpus could grow to around Rs 95 lakh, or Rs 1.9 crore with Rs 10,000 in monthly contributions, assuming the same 12% growth rate.
Before you start investing, it’s important to consider inflation and how it affects your financial objectives. For instance, if you need Rs 25 lakh for your child’s education in 20 years, inflation could raise that amount to Rs 35 lakh by the time you need it. In such cases, starting an SIP with Rs 3,000 a month over 30 years could result in a corpus of over Rs 1 crore, helping to cover the gap.
A SIP calculator can be a useful tool to calculate how much to invest and for how long to reach major financial goals, such as becoming a crorepati. Equity mutual funds are often recommended for long-term growth, as they typically offer higher returns that outpace inflation.
To cultivate a disciplined saving habit and avoid the urge to time the market, experts advise spreading your investments across 2-3 mutual fund schemes. Diversifying your portfolio across different market segments and sectors, and opting for funds with a solid history of beating their benchmarks, can increase your chances of long-term success.
If you haven’t started saving for your long-term goals yet, don’t worry—it’s never too late. However, the longer you wait, the more you’ll need to invest. Starting early, even with modest contributions, allows you to take advantage of the power of compounding, which helps your wealth grow exponentially over time.
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