The target corpus in this case is Rs 1 crore and the investment duration is 10 years.
With a simple SIP strategy in a mutual fund that gives 12% returns annually, here’s how the investments would grow:
Tenure: 10 years
Monthly required SIP: Rs 43,500
Estimated returns: 12%
Invested amount: Rs 52,20,000
Estimated returns: Rs 48,86,749
Total value: Rs 1,01,06,749
In the above case, the SIP amount of Rs 43,500 per month could be an unaffordable amount for many people. In such a case, one may also choose to opt for ‘step-up SIP’ that can spread the contribution over the years as the income increases:
Tenure: 10 years
Monthly required SIP: Rs 30,000
Annual step-up: 10% of the investment each year
Estimated returns: 12%
Invested amount: Rs 57,37,472
Estimated returns: Rs 43,85,505
Total value: Rs 1,01,22,978