Mutual Fund Calculator: Mutual funds give you two options of investment - lump sum and SIP (systematic investment plan). Most investors prefer SIP route in mutual fund as it allows them to invest a predetermined amount at regular intervals in their preferred mutual fund scheme without taking any financial burden. SIPs can be an excellent way to reach your financial goals if invested over a long period of time and benefitted from compounding. The most prevalent form of SIP is the monthly SIP, wherein a fixed sum is invested in the chosen mutual fund on a specified date each month. Mutual fund compounding allows investors to earn interest on their invested funds and reinvest the returns, generating further interest over time. The compounding impact of SIP investments allows income generation not only from the initial investment but also from the subsequent interest earned. Also read: Multibagger returns: THIS stock has turned Rs 10,000 into over Rs 25 lakh in 20 years Rs 1,000 SIP can be turned into Rs 3.14 crore in 40 years If a person starts an SIP of Rs 1,000 and continues it for 40 years until retirement, he can retire with a corpus of over Rs 3.14 crore. This is the power of compounding and consistency! In this case, we have assumed that the SIP would grow at an annualised rate of 15% for over 40 years. Trends show that there are many funds that have delivered over 15% returns over the last 20 years. Rs 1000 SIP can be turned into over Rs 7 crore in 40 years An SIP of Rs 1,000 with an increase of 10% every year can take a mutual fund investor to a corpus of Rs 7.36 crore by the time he retires at the age of 60. Again the rate of annualised return expected in this case is 15%. Compounding helps you earn not only on the initial principal amount but also on the accumulated interest from previous periods. In simpler terms, your money starts to work for you, generating returns upon returns, and thus accelerating the growth of your investment exponentially over time. By consistently investing and allowing your money to compound, you connect with this financial phenomenon and its potential of wealth accumulation over the long term.
