Small SIP, Big Impact: Rs 1,111 monthly SIP for 40 years, Rs 11,111 for 20 years or Rs 22,222 for 10 years, which do you think works better?
A Systematic Investment Plan (SIP) is a popular way to invest in mutual funds, as it allows investors to invest their accumulated funds gradually in their chosen equity-linked mutual fund scheme. In this way, the investor not only remains committed to the investment strategy but is also able to leverage the power of compounding. For consistent individuals, compounding increases investments consistently over time, helping to create more wealth over the years. Sometimes, combining produces amazing results, especially in the long run. In this article, let’s consider three scenarios to understand how important time is in compounding: monthly SIP of Rs 1,111 for 40 years, monthly SIP of Rs 11,111 for 20 years and monthly SIP of Rs 22,222 for years which is 10.
Can you predict the difference in the result in all three cases at an expected annual return of 12 percent?
SIP Return Rates | Which one will you choose: Rs 1,111 monthly investment for 40 years, Rs 11,111 for 20 years or Rs 11,111 for 10 years?
Scenario 1: Rs 1,111 monthly SIP for 40 years
Calculations show that at an annual return of 12 percent, a monthly SIP of Rs 1,111 for 40 years (480 months) will result in a corpus of around Rs 1.32 crore.
Scenario 2: Rs 11,111 monthly SIP for 20 years
Similarly, for the same expected return, a monthly SIP of Rs 11,111 for 10 years (120 months) will accumulate wealth of up to Rs 1.11 crore, according to calculations.
Scenario 3: Rs 22,222 monthly SIP for 10 years
Can you guess the corpus you will end up with a monthly SIP of Rs 22,222 for 10 years?
It will be approximately, Rs 51.63 lakh, figures show.
Now, let’s look at these rates in detail (figures in rupees):
Power of Integration | Scenario 1
| Time (in years) | Investment | Come back | The Corpus |
| 1 | 13,332 | 899 | 14,231 |
| 2 | 26,664 | 3,603 | 30,267 |
| 3 | 39,996 | 8,341 | 48,337 |
| 4 | 53,328 | 15,371 | 68,699 |
| 5 | 66,660 | 24,982 | 91,642 |
| 6 | 79,992 | 37,504 | 1,17,496 |
| 7 | 93,324 | 53,305 | 1,46,629 |
| 8 | 1,06,656 | 72,800 | 1,79,456 |
| 9 | 1,19,988 | 96,459 | 2,16,447 |
| 10 | 1,33,320 | 1,24,809 | 2,58,129 |
| 11 | 1,46,652 | 1,58,445 | 3,05,097 |
| 12 | 1,59,984 | 1,98,038 | 3,58,022 |
| 13 | 1,73,316 | 2,44,344 | 4,17,660 |
| 14 | 1,86,648 | 2,98,212 | 4,84,860 |
| 15 | 1,99,980 | 3,60,604 | 5,60,584 |
| 16 | 2,13,312 | 4,32,599 | 6,45,911 |
| 17 | 2,26,644 | 5,15,416 | 7,42,060 |
| 18 | 2,39,976 | 6,10,427 | 8,50,403 |
| 19 | 2,53,308 | 7,19,179 | 9,72,487 |
| 20 | 2,66,640 | 8,43,413 | 11,10,053 |
| 21 | 2,79,972 | 9,85,095 | 12,65,067 |
| 22 | 2,93,304 | 11,46,436 | 14,39,740 |
| 23 | 3,06,636 | 13,29,931 | 16,36,567 |
| 24 | 3,19,968 | 15,38,387 | 18,58,355 |
| 25 | 3,33,300 | 17,74,973 | 21,08,273 |
| 26 | 3,46,632 | 20,43,253 | 23,89,885 |
| 27 | 3,59,964 | 23,47,250 | 27,07,214 |
| 28 | 3,73,296 | 26,91,492 | 30,64,788 |
| 29 | 3,86,628 | 30,81,083 | 34,67,711 |
| 30 | 3,99,960 | 35,21,774 | 39,21,734 |
| 31 | 4,13,292 | 40,20,047 | 44,33,339 |
| 32 | 4,26,624 | 45,83,205 | 50,09,829 |
| 33 | 4,39,956 | 52,19,476 | 56,59,432 |
| 34 | 4,53,288 | 59,38,133 | 63,91,421 |
| 35 | 4,66,620 | 67,49,624 | 72,16,244 |
| 36 | 4,79,952 | 76,65,723 | 81,45,675 |
| 37 | 4,93,284 | 86,99,698 | 91,92,982 |
| 38 | 5,06,616 | 98,66,498 | 1,03,73,114 |
| 39 | 5,19,948 | 1,11,82,967 | 1,17,02,915 |
| 40 | 5,33,280 | 1,26,68,089 | 1,32,01,369 |
Power of Integration | Scenario 2
| Time (in years) | Investment | Come back | The Corpus |
| 1 | 1,33,332 | 8,992 | 1,42,324 |
| 2 | 2,66,664 | 36,035 | 3,02,699 |
| 3 | 3,99,996 | 83,417 | 4,83,413 |
| 4 | 5,33,328 | 1,53,719 | 6,87,047 |
| 5 | 6,66,660 | 2,49,846 | 9,16,506 |
| 6 | 7,99,992 | 3,75,074 | 11,75,066 |
| 7 | 9,33,324 | 5,33,095 | 14,66,419 |
| 8 | 10,66,656 | 7,28,066 | 17,94,722 |
| 9 | 11,99,988 | 9,64,674 | 21,64,662 |
| 10 | 13,33,320 | 12,48,199 | 25,81,519 |
| 11 | 14,66,652 | 15,84,593 | 30,51,245 |
| 12 | 15,99,984 | 19,80,560 | 35,80,544 |
| 13 | 17,33,316 | 24,43,655 | 41,76,971 |
| 14 | 18,66,648 | 29,82,392 | 48,49,040 |
| 15 | 19,99,980 | 36,06,364 | 56,06,344 |
| 16 | 21,33,312 | 43,26,381 | 64,59,693 |
| 17 | 22,66,644 | 51,54,624 | 74,21,268 |
| 18 | 23,99,976 | 61,04,819 | 85,04,795 |
| 19 | 25,33,308 | 71,92,433 | 97,25,741 |
| 20 | 26,66,640 | 84,34,893 |
1,11,01,533 |
Power of Integration | Scenario 3
| Time (in years) | Investment | Come back | The Corpus |
| 1 | 2,66,664 | 17,985 | 2,84,649 |
| 2 | 5,33,328 | 72,070 | 6,05,398 |
| 3 | 7,99,992 | 1,66,835 | 9,66,827 |
| 4 | 10,66,656 | 3,07,438 | 13,74,094 |
| 5 | 13,33,320 | 4,99,692 | 18,33,012 |
| 6 | 15,99,984 | 7,50,149 | 23,50,133 |
| 7 | 18,66,648 | 10,66,189 | 29,32,837 |
| 8 | 21,33,312 | 14,56,131 | 35,89,443 |
| 9 | 23,99,976 | 19,29,347 | 43,29,323 |
| 10 | 26,66,640 | 24,96,399 | 51,63,039 |
SIP & Compounding | What is compounding and how does it work?
For simplicity, one can understand compounding in SIPs as ‘rolling back’, where initial returns are added to the principal to improve future returns, and so on.
Compounding helps generate a return on both the original principal and interest that accrues gradually over time, which contributes to compound growth over long periods of time.
This approach eliminates the need to invest in lump sums, making it easier for many people—especially high earners—to invest in their favorite mutual funds. Learn more about the power of integration
