SIP Calculator: Start investing with ₹500; find out how much you could save over 10, 20, and 30 years.
SIP Calculator: What can saving just ₹500 achieve? If you have ever wondered this, then this article is for you. By setting aside ₹500 regularly over 10, 20, or 30 years, you can accumulate a substantial corpus—let us explain how.
SIP Calculator: In times of rising inflation, saving is crucial. Given the way inflation is increasing these days, people should start saving immediately. You do not need to wait until you have a large lump sum or until your salary increases enough to set aside a significant portion. There is no need to wait; you can begin saving with as little as ₹500.
Invest in an SIP
An SIP—or Systematic Investment Plan—is one of the best and easiest ways to save money. It allows you to choose a suitable investment plan and build your savings. When selecting a plan, look for one that offers a higher rate of return. You can start investing based on your specific budget. Here, we explain the math behind a ₹500 investment plan as an example.
Let’s look at the potential savings over 10, 20, and 30 years with a monthly investment of ₹500 at an annual return rate of 12%.
How much will be invested and what will the return be over 10 years?
If you invest ₹500 every month, your total investment over 10 years will be:
₹500 x 12 x 10 = ₹60,000
With an annual return of 12%, this amount could grow to approximately ₹1.16 lakh after 10 years. This means you invested ₹60,000 from your own pocket and earned a profit of around ₹56,000.
How much will be invested and what returns can be expected over 20 years?
Similarly, if you continue this ₹500 SIP for 20 years, your total investment will be:
500 x 12 x 20 = ₹1.20 lakh
With an annual return of 12%, this amount could grow to approximately ₹4.95 lakh after 20 years. This means you would invest a total of ₹1.20 lakh and earn a profit of around ₹3.75 lakh.
How much could the corpus grow to in 30 years?
If you continue investing this ₹500 for 30 years, your total investment will be:
500 x 12 x 30 = ₹1.80 lakh
With a 12% annual return, your fund could grow to approximately ₹17.49 lakh after 30 years. This implies that on an investment of ₹1.80 lakh, you could potentially earn a return of around ₹15.69 lakh.
A quick look at the math behind the ₹500 SIP:
| Investment Period | Monthly Investment | Total Investment | Estimated Corpus at 12% Annual Return |
|---|---|---|---|
| 10 Years | ₹500 | ₹60,000 | Approx. ₹1.16 lakh |
| 20 Years | ₹500 | ₹1.20 lakh | Approx. ₹4.95 lakh |
| 30 Years | ₹500 | ₹1.80 lakh | Approx. ₹17.49 lakh |
Points to consider
It is important to note that these calculations are based on an assumed annual return of 12%. However, different mutual funds offer varying rates of return, which can be higher or lower depending on market fluctuations. Therefore, the actual final amount may differ.
Additionally, an SIP is not an investment product in itself; rather, it is a method of investing in mutual funds. Before investing, it is crucial to consider your financial goals, risk appetite, and investment horizon. While starting with a small amount is easy, staying invested for the long term and leveraging the power of compounding are more critical for building a substantial corpus.
