SIP: A vast ocean emerges from the accumulation of individual drops; a formidable citadel is erected through the placement of each brick; and significant milestones are reached through gradual progress. However, when one focuses solely on the small scale of each drop, brick, or step, the attainment of grand objectives can seem nearly unattainable.

This is the reaction when we’re told that substantial wealth can be accumulated through daily savings or monthly investments of modest amounts. We begin to envision how consistent, incremental investments over time can lead to the creation of a significant corpus.

 

As a consequence, numerous individuals dismiss the concept of saving and investing. Nonetheless, there’s a unique allure to small-scale savings.

Similar to how individual drops, bricks, or steps come together, they can collectively form a substantial retirement fund worth millions.

Similarly, if you allocate Rs 100 each day towards savings and invest it in a market-linked scheme such as a mutual fund through a systematic investment plan (SIP), you can gradually build a significant retirement nest egg, even with a 12% annual return on investments. What does saving Rs 100 entail?

Saving Rs 100 per day equates to Rs 36,500 saved annually, or approximately Rs 3,041.66 per month.

Is it a big deal to save Rs 36,500?

A commonly cited financial recommendation advises individuals to save at least 20% of their monthly income.

If your monthly savings amount to Rs 3,041.66, it suggests that someone with a salary closer to Rs 15,500 per month can manage to save that sum.

If your monthly income exceeds Rs 15,500, you have the potential to save a greater amount. However, let’s maintain the target of saving Rs 3,041.66 each month.

What possibilities does a monthly savings of Rs 3,041.66 offer you?

Suppose you set aside Rs 3,041.66 each month and invest it in mutual funds via SIP.

With a 12% return on investment, your projected amount after 15 years would be Rs 15,34,416, compared to your total investment of Rs 5,47,380 by that time.

You will have long-term capital gains of Rs 9,87,036.

However, the true power of SIP compounding growth becomes evident after 15 years of investment.

What will a monthly investment of Rs 3,041.66 yield for you in 20 years?

Now, let’s extend this investment for another five years, making it a total of 20 years.

At this point, your projected amount will be Rs 30,38,409, with your total investment amounting to Rs 7,29,840. This implies that your long-term capital gains will be Rs 23,08,569.

What will a monthly investment of Rs 3,041.66 yield for you in 25 years?

Beyond 20 years, your investment experiences accelerated growth.

After 25 years, your initial investment will have grown to Rs 9,12,300, with long-term capital gains totaling Rs 48,58,408.

This implies that your projected amount will be Rs 57,70,708.

What will a monthly investment of Rs 3,041.66 yield for you in 30 years?

In 30 years, saving Rs 100 a day, or investing Rs 3,041.66 a month, can lead you to achieve millionaire status.

Here’s how your mutual fund investment would shape up: Your total investment will amount to Rs 10,94,760, resulting in long-term capital gains of Rs 96,39,708, and an expected wealth of Rs 1,07,34,468.

Thirty years may seem like a considerable stretch of time. However, if you initiate your investments early, say at 25 years old, you have the potential to amass a corpus exceeding Rs 1 crore by the time you reach 55 years old, and this can be achieved with just Rs 100 saved daily or a monthly investment of Rs 3,041.66.