How a ₹15,000 SIP Can Potentially Build an About ₹8 Crore Retirement Corpus

Starting early with systematic investment plans (SIPs) can provide significant financial security in the long run. By investing regularly and letting the power of compounding work, one can build a substantial retirement corpus. 

Let’s take a look at how Mr Ram, a 30-year-old professional, can plan his retirement savings effectively.

Mr. Ram’s Retirement Goal

Mr. Ram, a working professional aged 30, is keen to ensure a comfortable retirement. At this point in his career, his lifestyle is decent, but he aims for a solid corpus that will support him through his retirement years. He understands the importance of starting early and investing consistently to meet his long-term financial goals.

Starting with a ₹15,000 SIP

Given his current income and expenses, Mr. Ram decides to start with a Systematic Investment Plan (SIP) of ₹15,000 per month. An SIP is an effective way to build wealth over time by investing a fixed amount regularly in mutual funds, thus averaging the cost of investments and reducing market timing risk.

Step Up of 5% Annually

To keep pace with inflation and his growing income, Mr. Ram plans to increase his SIP by 5% every year. This annual step-up ensures that his contributions grow as his income does, allowing him to take advantage of increasing returns over time.

Projected Returns of 12%

Assuming an annual return of 12%, which is a reasonable estimate based on the historical performance of equity mutual funds, the investment will compound significantly. Over the next 30 years, with the power of compounding, his initial investments will grow substantially, and the returns will continue to accumulate.

The Final Corpus After 30 Years: Almost ₹8 Crore 

If Mr. Ram sticks to his investment plan, his ₹15,000 monthly SIP, with a 5% step-up each year, would grow to an impressive ₹7.91 crore over 30 years. Here's a breakdown of the investment:

• Invested Amount: ₹1,19,59,320
• Estimated Returns: ₹6,71,43,615
• Final Value: ₹7,91,02,935

This significant sum will provide Mr. Ram with the financial freedom he needs during his retirement years. You can also check how much you can accumulate with your own SIP using a step-up SIP calculator and tailor it to your financial goals.

Read More: How to Calculate Retirement Corpus? Retirement Planning! 

Conclusion

Mr. Ram’s story highlights how starting early, maintaining consistency, and opting for SIPs with regular step-ups can create a strong foundation for a secure retirement. With discipline and long-term planning, anyone can achieve their retirement goals, just like Mr. Ram.

By focusing on SIPs, keeping inflation-adjusted step-ups in place, and expecting reasonable returns, professionals like Mr. Ram can plan for a financially secure future. That said, returns are subject to market performance and no returns are guaranteed. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in securities are subject to market risks. Read all related documents carefully before investing.