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SIP Calculator: Saving and investing ₹500 every month might seem insignificant, but doing so over the long term can build a substantial corpus. SIPs offer the dual benefits of time and the power of compounding.

If your goal is to build a corpus of ₹2 lakh, it can be achieved through a monthly SIP of ₹500. The investment tenure required will vary depending on the rate of return. A 12% return would take longer, whereas an 18% return could help you reach the target sooner.

When will a ₹500 SIP grow to ₹2 lakh?

The calculations below are based on a monthly SIP of ₹500. See the time required to reach ₹2 lakh at various estimated rates of return.

Estimated Annual Return
Time to reach ₹2 lakh    Total SIP Investment    Estimated Corpus
12%    13 years 5 months    ₹80,500    ₹2,00,130
15%    12 years    ₹72,000    ₹2,01,792
18%    10 years 10 months    ₹65,000    ₹2,00,552
How long will it take at a 12% return?

Suppose you start an SIP of ₹500 per month. If you earn an average annual return of 12%, it will take approximately 13 years and 5 months to build a corpus of ₹2 lakh.

During this period, your total out-of-pocket investment will be ₹80,500, while the remaining ~₹1.20 lakh will be generated through returns. This clearly demonstrates the advantage of long-term investing.

What happens with a 15% return?

If the SIP yields an average annual return of 15%, the target could be achieved in about 12 years. Your total investment during this time would be ₹72,000.

Compounding helps accelerate the growth of returns, enabling the fund to reach the ₹2 lakh mark. Compared to a 12% return, you can achieve your goal faster.

How long will it take with an 18% return? If you earn an average annual return of 18%, a corpus of ₹2 lakh can be accumulated in approximately 10 years and 10 months. During this period, your total out-of-pocket investment would be ₹65,000.

The remaining amount would come from the returns generated. However, achieving such a return consistently every year is challenging. While some mid-cap and small-cap funds have delivered such returns over the long term, they also carry higher risk.

**Time is your greatest ally in SIPs**

Those starting an SIP with a small amount should not expect to get rich quickly; the real benefit lies in giving it time. The longer you stay invested, the more time compounding has to work its magic.

If your income rises, you can gradually increase your SIP amount. For instance, after starting with ₹500, you could raise it to ₹1,000 or more. This can help you reach the ₹2 lakh target even faster.

**No guarantee of returns**

It is important to understand that figures like 12%, 15%, and 18% are merely estimated returns. Mutual fund returns are not fixed in advance; actual returns may vary depending on market fluctuations.

Therefore, when starting an SIP, do not focus solely on high returns. It is crucial to consider your financial goals and investment horizon. Even a small SIP can build a substantial corpus if given enough time.

**Points to consider while investing**

Define your goal and investment horizon before you start investing.
Do not take risks beyond your capacity in the hope of higher returns.
Avoid stopping your SIP in a panic when the market falls.
Consider increasing your SIP amount as your income grows.
Maintain a separate emergency fund; do not invest money that you might need urgently.
Before investing, evaluate the fund based on its category, risk profile, and suitability for your specific goals.

Disclaimer: This content has been sourced and edited from Money Control. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.