Investing doesn’t take a fortune — even with small amounts, you can build extraordinary wealth over time. Investing just Rs 200 a day in a Systematic Investment Plan (SIP) can go far—in fact, it can turn into a huge sum of up to Rs 60 lakhs without making major adjustments to your current financial circumstances. And with the help of a reliable SIP calculator, you can figure out how long it will take and how different rates of returns can help speed up that process. On that note, let’s find out how your Rs 200 per day savings can become Rs 60 lakhs with a systematic investment plan and how an SIP calculator can help that happen.
How does an SIP calculator work?
An SIP calculator helps calculate the expected returns from your mutual funds SIPs over time by taking into consideration factors such as frequency of investments, amount being invested, and expected rate of return on investments. It also considers compounding effects that occur when your earnings are reinvested to generate more earnings over time. All these factors combined play an important role in determining the final returns on an investment plan.
Getting started with your own investment plan with an SIP calculator
Once you know your investment amount, the next step is to choose a mutual fund scheme based on factors such as risk appetite, financial goals, and liquidity preference, among others. After choosing a scheme, use an online mutual fund SIP calculator to estimate returns over different periods, such as five years or 10 years depending on your preferences.
The calculator will display details such as expected corpus amount at maturity, the total principal invested, etc., which can then be used for planning purposes or for comparison between different investment options. Additionally, you can also adjust the inputs in real-time to see how your decisions affect the overall results immediately, making these calculators incredibly powerful tools for financial planning and decision making.
Let’s say, you are 25 years old and invest in an SIP with Rs 200 per day (Rs 6,000 monthly) for 20 years at a 12% rate of return, then as per the calculator, your investment would amount to approximately Rs 60 lakh after 20 years. Along with the total maturity amount, you could also see the amount you invested and the interest you earned from it.
And if you find the best mutual funds that offer more than 12% return rate, then you could even generate more returns over time. The key is to maintain investment discipline and refrain from withdrawing amounts during the duration.
How can your Rs 200/day grow into Rs 60 lakhs with a systematic investment plan?
An SIP investment helps to make your Rs 200 per day contribution grow to Rs 60 lakhs by taking advantage of two proven strategies.
The first is the power of compounding interest, which allows you to earn returns on both the principal and interest earned, leading to exponential growth over time.
Second is the rupee-cost averaging approach which helps protect your investment from short-term market volatility. Since you invest a fixed amount of money at regular intervals in an SIP regardless of market conditions, you purchase more units when the market is low and fewer units when the market is high. This helps to reduce your average cost per unit over time.
Closing notes
With the power of compounding, financial discipline, rupee-cost averaging, and convenience as its key features, SIP investments can give you a chance to turn a small contribution like Rs 200 per day into a much larger sum, such as Rs 60 lakhs.
Also, SIP calculators can let you compare mutual funds beforehand and understand their potential returns to help you reach your goals faster. But at the same time, the commitment to remaining invested for a long term will determine your success in achieving wealth. Therefore, taking the long-term outlook when investing is often advisable in order to potentially create greater rewards over time.