SIP Calculator: A ₹2,000 SIP at the time of a child's birth—how much will it grow to in 18 years? Understand the full calculation...
SIP Calculator: With the birth of a child, parents are faced with a long list of future needs—education, college, career, and more. While most of these expenses may seem small today, the amounts involved could become substantial 15–18 years down the line. Starting an investment early can make a significant difference.
Suppose a monthly SIP of ₹2,000 is started in the child's name right after birth. This is not a huge amount, nor does it place excessive strain on the family's monthly budget. However, an 18-year horizon can transform this modest sum into a substantial corpus.
**Around ₹11.5 lakh with a 10% return**
If this SIP yields an average annual return of 10% over the long term, a fund of approximately ₹11.53 lakh could be accumulated after 18 years. This means your invested capital would be ₹4.32 lakh, while the returns would generate about ₹7.21 lakh. Time is the crucial factor here; the 18-year investment tenure allows for the compounding of returns.
**Over ₹14 lakh with a 12% return**
If the average annual return over the long term is 12%, the outlook becomes even stronger. The same monthly SIP of ₹2,000 could grow into a fund of approximately ₹14.23 lakh after 18 years. Even in this scenario, the total contribution remains ₹4.32 lakh, with investment returns accounting for about ₹9.91 lakh.
**Around ₹20 lakh with a 15% return**
The most impressive growth occurs when the investment yields an average annual return of 15%. In such a case, a ₹2,000 SIP could reach approximately ₹19.65 lakh after 18 years, with the total investment remaining at ₹4.32 lakh. However, the return amounts to approximately ₹15.33 lakh. This is where the impact of compounding becomes clearly visible. While the investment amount is small, the long duration allows the returns ample time to grow.
How much money after 18 years?
Return Total Investment Fund after 18 years Profit
10% ₹4.32 lakh ₹11.53 lakh ₹7.21 lakh
12% ₹4.32 lakh ₹14.23 lakh ₹9.91 lakh
15% ₹4.32 lakh ₹19.65 lakh ₹15.33 lakh
Note: 10%, 12%, and 15% are merely projected returns. Actual returns may vary based on market performance.
No need to stop at just ₹2,000
You can consider the ₹2,000 SIP as a starting point. As the family income rises, the SIP amount can also be increased. Suppose, after a few years, the monthly SIP is raised from ₹2,000 to ₹3,000 or ₹5,000; the corpus accumulated by the end of 18 years could be significantly larger.
This can also be planned using a 'Step-up SIP,' where the investment amount is gradually increased in line with rising income. The advantage here is that it does not place an excessive financial burden on the family initially, and as income grows later, the child's financial goal can also be scaled up.₹2,000 SIP at the time of a child's birth—how much will it grow to in 18 years? Understand the full calculation...
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