Retirement Planning: This scheme is perfect for retirement, it works wonders on compounding...

If you're looking for a scheme that can help you build a large corpus for retirement, a SIP (Systematic Investment Plan) is the perfect option. If the magic of compounding continues over a long period, even a small investment can turn into crores. Let's understand how this magic happens.

A ₹5,000 SIP can create a fund worth ₹1.5 crore.

SIPs have the power to turn your investments of lakhs over many years into crores. The important thing is that you don't need to invest a large sum. Investing just ₹5,000 every month can create a corpus worth ₹1.5 crore.

Calculation of a 12% return.

Suppose you invest ₹5,000 every month and continue this investment for 30 years, your total investment will be ₹18,00,000. If your SIP earns an average annual return of 12%, then after 30 years of compounding, your investment will reach ₹1,54,04,866. Of this, ₹1,36,04,866 will be earned as interest, which is approximately 8.5 times the return on the principal.

Perfect Scheme for Retirement
If you want to build a substantial retirement fund over the long term, a SIP can be the best choice. With a SIP, you can start, stop, or increase your investment at your convenience. It's a disciplined investment method that provides a strong corpus for retirement without stress.

The Magic of Compounding Builds a Corpus
This provides the tremendous benefit of compounding. Compounding means interest on interest. When your investment and the interest earned on it grow together, the returns increase exponentially each year. This is why the longer the time, the greater the profit.

Long-Term Benefits of SIPs
Long-term SIPs reduce the impact of market fluctuations. Your average purchase price decreases, while your returns increase. This means patience is the key to SIP success.

Benefits of Starting Early
If you start SIPs at age 25, you could become a millionaire by age 55. The earlier you start, the longer compounding will work. This means you'll have less financial stress in retirement.

Disclaimer: This content has been sourced and edited from Dainik Jagran. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.