Small SIP, Big Impact: Rs 5,555 monthly SIP for 30 years, Rs 7,777 for 25 years or Rs 9,999 for 20 years, which do you think works best?
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. This way, the investor not only stays committed to your investment strategy but also gets to leverage the power of compounding. For consistent individuals, compounding increases investments consistently over time, helping to create greater wealth over the years. Sometimes, combining produces amazing results, especially in the long run. In this article, let’s consider three scenarios to understand the importance of time in compounding: a monthly SIP of Rs 5,555 for 30 years, a monthly SIP of Rs 7,777 for 25 years and a monthly SIP of Rs 9,999 for years which is 20.
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 5,555 monthly investment for 30 years, Rs 7,777 for 25 years or Rs 9,999 for 20 years?
Scenario 1: Rs 5,555 monthly SIP for 30 years
Calculations show that at a return of 12 percent per annum, a monthly SIP of Rs 5,555 for 30 years (360 months) will result in a corpus of around Rs 1.96 crore.
Scenario 2: Rs 7,777 monthly SIP for 25 years
Similarly, for the same expected return, a monthly SIP of Rs 7,777 for 25 years (300 months) will accumulate wealth of up to Rs 1.48 crore, according to calculations.
Scenario 3: Rs 9,999 monthly SIP for 20 years
Can you guess the corpus you will end up with a monthly SIP of Rs 9,999 for 20 years (240 months)?
It will be around, Rs 99.90,480 lakh, figures show.
ALSO READ: Small SIP, Big Impact: Rs 3,000 monthly SIP for 24 years, Rs 13,000 for 12 years or Rs 30,000 for 6 years, which do you think works better?
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 | 66,660 | 4,496 | 71,156 |
| 2 | 1,33,320 | 18,016 | 1,51,336 |
| 3 | 1,99,980 | 41,705 | 2,41,685 |
| 4 | 2,66,640 | 76,853 | 3,43,493 |
| 5 | 3,33,300 | 1,24,912 | 4,58,212 |
| 6 | 3,99,960 | 1,87,520 | 5,87,480 |
| 7 | 4,66,620 | 2,66,523 | 7,33,143 |
| 8 | 5,33,280 | 3,64,000 | 8,97,280 |
| 9 | 5,99,940 | 4,82,293 | 10,82,233 |
| 10 | 6,66,600 | 6,24,044 | 12,90,644 |
| 11 | 7,33,260 | 7,92,225 | 15,25,485 |
| 12 | 7,99,920 | 9,90,191 | 17,90,111 |
| 13 | 8,66,580 | 12,21,718 | 20,88,298 |
| 14 | 9,33,240 | 14,91,062 | 24,24,302 |
| 15 | 9,99,900 | 18,03,020 | 28,02,920 |
| 16 | 10,66,560 | 21,62,996 | 32,29,556 |
| 17 | 11,33,220 | 25,77,080 | 37,10,300 |
| 18 | 11,99,880 | 30,52,135 | 42,52,015 |
| 19 | 12,66,540 | 35,95,893 | 48,62,433 |
| 20 | 13,33,200 | 42,17,067 | 55,50,267 |
| 21 | 13,99,860 | 49,25,475 | 63,25,335 |
| 22 | 14,66,520 | 57,32,182 | 71,98,702 |
| 23 | 15,33,180 | 66,49,653 | 81,82,833 |
| 24 | 15,99,840 | 76,91,937 | 92,91,777 |
| 25 | 16,66,500 | 88,74,863 | 1,05,41,363 |
| 26 | 17,33,160 | 1,02,16,267 | 1,19,49,427 |
| 27 | 17,99,820 | 1,17,36,250 | 1,35,36,070 |
| 28 | 18,66,480 | 1,34,57,458 | 1,53,23,938 |
| 29 | 19,33,140 | 1,54,05,413 | 1,73,38,553 |
| 30 | 19,99,800 | 1,76,08,871 | 1,96,08,671 |
Power of Integration | Scenario 2
| Time (in years) | Investment | Come back | The Corpus |
| 1 | 93,324 | 6,294 | 99,618 |
| 2 | 1,86,648 | 25,222 | 2,11,870 |
| 3 | 2,79,972 | 58,387 | 3,38,359 |
| 4 | 3,73,296 | 1,07,594 | 4,80,890 |
| 5 | 4,66,620 | 1,74,876 | 6,41,496 |
| 6 | 5,59,944 | 2,62,528 | 8,22,472 |
| 7 | 6,53,268 | 3,73,133 | 10,26,401 |
| 8 | 7,46,592 | 5,09,600 | 12,56,192 |
| 9 | 8,39,916 | 6,75,211 | 15,15,127 |
| 10 | 9,33,240 | 8,73,661 | 18,06,901 |
| 11 | 10,26,564 | 11,09,115 | 21,35,679 |
| 12 | 11,19,888 | 13,86,267 | 25,06,155 |
| 13 | 12,13,212 | 17,10,405 | 29,23,617 |
| 14 | 13,06,536 | 20,87,486 | 33,94,022 |
| 15 | 13,99,860 | 25,24,228 | 39,24,088 |
| 16 | 14,93,184 | 30,28,194 | 45,21,378 |
| 17 | 15,86,508 | 36,07,912 | 51,94,420 |
| 18 | 16,79,832 | 42,72,989 | 59,52,821 |
| 19 | 17,73,156 | 50,34,250 | 68,07,406 |
| 20 | 18,66,480 | 59,03,893 | 77,70,373 |
| 21 | 19,59,804 | 68,95,665 | 88,55,469 |
| 22 | 20,53,128 | 80,25,055 | 1,00,78,183 |
| 23 | 21,46,452 | 93,09,515 | 1,14,55,967 |
| 24 | 22,39,776 | 1,07,68,712 | 1,30,08,488 |
| 25 | 23,33,100 | 1,24,24,808 | 1,47,57,908 |
Power of Integration | Scenario 3
| Time (in years) | Investment | Come back | The Corpus |
| 1 | 1,19,988 | 8,092 | 1,28,080 |
| 2 | 2,39,976 | 32,429 | 2,72,405 |
| 3 | 3,59,964 | 75,069 | 4,35,033 |
| 4 | 4,79,952 | 1,38,335 | 6,18,287 |
| 5 | 5,99,940 | 2,24,841 | 8,24,781 |
| 6 | 7,19,928 | 3,37,537 | 10,57,465 |
| 7 | 8,39,916 | 4,79,742 | 13,19,658 |
| 8 | 9,59,904 | 6,55,200 | 16,15,104 |
| 9 | 10,79,892 | 8,68,128 | 19,48,020 |
| 10 | 11,99,880 | 11,23,278 | 23,23,158 |
| 11 | 13,19,868 | 14,26,006 | 27,45,874 |
| 12 | 14,39,856 | 17,82,343 | 32,22,199 |
| 13 | 15,59,844 | 21,99,092 | 37,58,936 |
| 14 | 16,79,832 | 26,83,911 | 43,63,743 |
| 15 | 17,99,820 | 32,45,435 | 50,45,255 |
| 16 | 19,19,808 | 38,93,393 | 58,13,201 |
| 17 | 20,39,796 | 46,38,744 | 66,78,540 |
| 18 | 21,59,784 | 54,93,843 | 76,53,627 |
| 19 | 22,79,772 | 64,72,607 | 87,52,379 |
| 20 | 23,99,760 | 75,90,720 | 99,90,480 |
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
