SIP Calculator: A monthly SIP of ₹500... How much of a corpus will be created over 10, 20, and 30 years? Understand the full calculation..

SIP Calculator: "What can really be achieved with just ₹500?" This question crosses the mind of almost every investor before starting an SIP. Many people keep postponing their investment because of this mindset. They feel that unless they can save ₹5,000 or ₹10,000 every month, there is no point in investing.

In reality, that is not the case. It is not just the investment amount that works for you in an SIP; time also generates wealth. The longer you stay invested, the greater the impact of compounding. Let’s look at the detailed figures for a monthly SIP of ₹500.

How much of a corpus can be built with a ₹500 SIP?

Estimated Annual Return | 10 Years (Investment: ₹60,000) | 20 Years (Investment: ₹1,20,000) | 30 Years (Investment: ₹1,80,000)
--- | --- | --- | ---
10% | ₹1,03,276 | ₹3,82,848 | ₹11,39,663
12% | ₹1,16,170 | ₹4,99,574 | ₹17,64,957
15% | ₹1,39,329 | ₹7,57,977 | ₹35,04,910

First, let's understand the calculation for a 10% return.

Suppose you start an SIP of ₹500 per month and continue it for 10 years. During this period, your total out-of-pocket investment will be ₹60,000. If you earn an average annual return of 10%, this amount could grow to approximately ₹1.03 lakh. This means you could gain around ₹43,000 solely from returns.

Now, extend this SIP to 20 years. Your total investment would be ₹1.20 lakh, but the estimated corpus could grow to ₹3.82 lakh. This implies a gain of approximately ₹2.63 lakh from returns alone. If you invest patiently for 30 years, your total investment would be just ₹1.80 lakh. However, the fund could grow to approximately ₹11.40 lakh. This means your earnings could be many times greater than your actual investment.

What if you earn a 12% return?

Let’s assume an average annual return of 12%. Over 10 years, an investment of ₹60,000 could grow to about ₹1.16 lakh, with the return component amounting to roughly ₹56,000. Over 20 years, the total investment would be ₹1.20 lakh, yet the estimated fund value could reach around ₹5 lakh—meaning a gain of approximately ₹3.80 lakh over the invested amount.

The figures for 30 years are even more striking. While the total investment remains ₹1.80 lakh, the estimated fund could grow to about ₹17.65 lakh. This implies that around ₹15.85 lakh could be added solely through the power of compounding.

The picture changes with a 15% return

If you earn an average annual return of 15% over the long term, a ₹60,000 SIP could grow to about ₹1.39 lakh in 10 years. Over 20 years, the total investment would be ₹1.20 lakh, but the fund could rise to approximately ₹7.58 lakh—meaning the returns alone could exceed ₹6.38 lakh.

The 30-year calculation is the most astonishing. You would invest only ₹1.80 lakh from your pocket, yet the estimated fund could grow to over ₹35 lakh. This means approximately ₹33 lakh could be added purely through returns and compounding.

Why does such a massive difference emerge over 30 years?

In the initial years, the SIP grows gradually, and many people feel the fund isn't expanding very rapidly. However, the real momentum builds up later.

Initially, you earn returns on your money. Subsequently, you begin earning returns on those accumulated returns as well. This is precisely what is known as compounding. That is precisely why the fund begins to grow rapidly after the 20th year.

Don't underestimate a small SIP.

Suppose someone starts an SIP of ₹500 at the age of 25. Meanwhile, another person keeps thinking that the amount is too small and decides to invest later. Often, this very delay proves to be the costliest mistake.

In investing, starting early is more important than the size of the investment amount. Later, as income rises, the SIP amount can be increased. The hardest part isn't investing lakhs of rupees; the hardest part is simply starting that first ₹500 SIP.

Disclaimer: This content has been sourced and edited from Money Control. 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.