The "power of compounding" is considered the ultimate magic in the world of investing. This means that the returns on your investments are reinvested over time, generating returns on that as well. This means your money grows gradually and can become a substantial sum over time. Nowadays, many people believe that becoming a millionaire requires investing large sums, but the truth is that even small, regular investments can create a substantial corpus over time. Especially with SIPs (Systematic Investment Plans), investing a small amount every month can create a corpus worth crores.

Compounding simply means "interest on interest." This means that the returns on the money you invest also earn you income over time. Therefore, the longer you stay invested, the greater the returns. Growth may seem slow initially, but returns begin to increase rapidly over time.

When can a monthly SIP of ₹6,000 become a corpus of ₹1 crore?
If an investor makes a monthly SIP of around ₹6,000 and earns an average annual return of 12–15 percent, this amount can grow substantially over the long term. However, according to experts, at a 12 percent return, this investment could reach around ₹50–55 lakh in about 20 years. If returns remain around 15 percent, it could reach close to ₹1 crore in about two decades.

If an individual makes a monthly SIP of ₹10,000 and earns an annual return of around 12 percent, this investment could generate a corpus of approximately ₹1 crore in about 20 years. The total investment during this period is approximately ₹26.4 lakh, while the remaining amount is generated from returns generated through compounding.

Achieve your goal faster with a monthly investment of ₹14,000

Increasing your investment amount to ₹14,000 per month can help you achieve your goal of ₹1 crore faster. A higher investment means more capital is used for compounding, allowing the fund to grow faster. Therefore, increasing your investment or increasing your SIPs a little each year can help you reach your goal faster.

Why is it important to start early?
According to an ET report, financial advisors always advise that starting an SIP at the age of 25 reaps the benefits of compounding for decades. However, if you start at the age of 35 or 40, you may have to invest more to achieve the same goal. The benefits of compounding are realized only if investors maintain their investments over a long period of time. Markets fluctuate, but regular investments and patience are the key to building a large corpus.

Even small monthly SIPs of ₹6,000, ₹10,000, or ₹14,000 can create a substantial corpus over time. The real magic of compounding is seen over the long term. Therefore, if the goal is to build a corpus of ₹1 crore, it's crucial to start early, invest regularly, and stay invested for the long term.

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