Rs 5,000 Monthly SIP For 20 Years: How Much Wealth Can You Build? Know Here

SIP for 20 years: Before beginning any investment, it’s essential to account for inflation and the time frame of your financial goals

Using a SIP calculator can assist in determining how much to invest and for how long to achieve significant financial milestones, such as becoming a crorepati.

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SIP for 20 years: In today's financial landscape, saving money should be guided by specific goals and a clear target amount. Whether it's for a child's education or retirement planning, setting these objectives helps accumulate the necessary funds efficiently. Experts recommend following the principle of 'Income minus Savings equals Expenses', a concept that ensures savings are prioritised before spending. Unfortunately, many individuals do the opposite, spending first and saving what's left. By flipping this approach, people are more likely to meet their financial goals.

For example, a monthly investment of Rs 5,000 in an equity mutual fund with an assumed 12 per cent growth rate could grow to Rs 50 lakh after 20 years. Out of this, Rs 12 lakh will be the original investment, while the rest is profit. Doubling the savings to Rs 10,000 per month could result in almost Rs 1 crore over the same period.

Extending the investment horizon to 25 years could yield about Rs 95 lakh with Rs 5,000 in monthly savings, or Rs 1.9 crore with Rs 10,000, assuming the same 12 per cent growth rate.

However, before beginning any investment, it’s essential to account for inflation and the time frame of your financial goals. For instance, if you anticipate needing Rs 25 lakh for your child's education in 20 years, inflation could drive this requirement to Rs 35 lakh after 25 years. A monthly SIP (Systematic Investment Plan) of Rs 3,000 over 30 years could mature to more than Rs 1 crore, helping bridge the gap.

Using a SIP calculator can assist in determining how much to invest and for how long to achieve significant financial milestones, such as becoming a crorepati. Equity mutual funds are a recommended option, as they offer strong inflation-adjusted returns over the long term.

To foster a disciplined saving habit and avoid the temptation to time the market, financial experts suggest setting up SIPs in 2-3 mutual fund schemes. Diversifying these funds across different market capitalisations and sectors, and choosing funds with a track record of outperforming their benchmarks, is key to long-term success.

For those yet to start saving for long-term goals, it's never too late. The longer you delay, the larger the required investments will become. By starting early, even with smaller contributions, you can leverage the power of compounding to grow your wealth over time.