SIP Calculator: Invest via SIP for 20 years, not just 10... the difference will leave you amazed; understand the full calculation..
SIP Calculator: Starting an SIP of ₹1,000, ₹5,000, or ₹10,000 per month seems easy. The challenge lies in sustaining it over the long term. Many people assume that after investing for 8–10 years, they have accumulated a substantial amount. However, the real magic happens after that.
In reality, it is not just your money that works in an SIP; time works for you as well. That is why the outcome of a 20-year SIP is not merely double that of a 10-year SIP; the difference can amount to several lakh rupees. Let’s understand this in simple terms.
What happens if you earn a 12% return?
The figures below are based on the assumption that you invest a fixed amount via SIP every month and earn an average annual return of 12% throughout the period.
Monthly SIP Fund after 10 years Fund after 20 years
₹1,000 ₹2.30 lakh ₹9.99 lakh
₹5,000 ₹11.50 lakh ₹49.95 lakh
₹10,000 ₹23.00 lakh ₹99.90 lakh
Note: These figures are estimates based on a 12% return. Actual returns will depend on market performance.
Money quadrupled in 10 years?
At first glance, it might seem that 20 years is simply double the duration of 10 years, so the money should also double. But that is not the case. Suppose you start an SIP of ₹10,000 per month. Over 10 years, your total investment would be ₹12 lakh, and the fund value would grow to approximately ₹23 lakh.
If you continue this SIP for another 10 years, your total investment would reach ₹24 lakh, but the fund value would soar to nearly ₹1 crore. In other words, while you increased your investment by only ₹12 lakh, the fund grew by approximately ₹77 lakh. This is the power of compounding.
Understand the math using a mango tree.
Imagine you plant a mango sapling in your courtyard. For the first few years, it simply grows. It yields very little fruit initially; often, it feels like all the effort has gone to waste.
However, once the tree matures, it produces an abundant harvest of mangoes every season. That is when you realize the true reward goes to those who waited. An SIP works in the same way: the early years are for preparation, while the later years are for reaping the returns.
**Stopping an SIP early is a mistake**
Many people stop their SIPs after 8–10 years to fund a home, a car, or other needs, believing they have accumulated a substantial amount. By doing so, however, they step out just as the most powerful phase of compounding is about to kick in.
Always remember that compounding appears slow at the start, but its momentum accelerates rapidly over time.
**What happens with a ₹5,000 SIP?**
A monthly SIP of ₹5,000 can grow into a corpus of approximately ₹11.50 lakh over 10 years.
If you continue this investment for 20 years, the fund could reach around ₹49.95 lakh. In other words, simply extending the time horizon can add nearly ₹38 lakh to the final corpus.
**Building a large corpus even with a small SIP**
Many people wonder what a monthly SIP of ₹1,000 or ₹2,000 can actually achieve.
Yet, even a ₹1,000 monthly SIP can grow to around ₹10 lakh over 20 years, assuming an average annual return of 12%. This amount can significantly help with goals like children's education, a bike purchase, a car down payment, or other major financial objectives.
**The lesson for investors**
The greatest strength of an SIP lies not in the investment amount, but in time. If you start early and do not interrupt your investments, compounding gradually begins to work in your favor.
Therefore, if your SIP is active and there is no pressing need to stop, consider continuing it for 20 years or longer instead of halting it at the 10-year mark. Often, those extra 10 years are precisely what pave the way for your fund to grow from lakhs to crores.
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.
