Top News

The SIP 'Rule-40' involves increasing your investment amount by 10% annually. Assuming an estimated return of 12%, the goal is to accumulate ₹2 crore by the age of 40.

SIP Rule-40 News: If you start investing at a young age, the power of compounding can help even small investments grow into a substantial corpus over time. In this context, the SIP 'Rule-40' can prove to be an excellent option for you. Under this strategy, the SIP amount is increased by 10% every year. Assuming an average annual return of 12%, it is possible to achieve a target corpus of ₹2 crore by the age of 40.

What is the SIP 'Rule-40'?

The biggest advantage of this investment strategy is the benefit of starting early. You can begin with a fixed monthly SIP amount. A key feature is that the SIP contribution increases by 10% annually compared to the previous year; essentially, as your income rises, your investment amount grows alongside it.

The calculation assumes an average annual return of 12%.
The SIP amount increases by 10% each year.
The earlier you start investing, the lower your initial SIP amount needs to be.

What SIP amount is required if starting between the ages of 21 and 25?

For instance, if you aim to accumulate ₹2 crore by the age of 40, the required initial SIP amount will vary depending on the age at which you start. Age 21: Approx. ₹11,796 per month
Age 22: Approx. ₹13,875 per month
Age 23: Approx. ₹16,370 per month
Age 24: Approx. ₹19,379 per month
Age 25: Approx. ₹23,031 per month

This clearly demonstrates that delaying the start of your investment by even a year increases the required initial SIP amount. If you start at age 21 and invest for 19 years—factoring in an average return of 12% and a 10% annual step-up—the corpus could grow to approximately ₹2 crore. This means the returns alone could contribute around ₹1.28 crore to the total.

For whom is the SIP 'Rule-40' suitable?

It is suitable for those at the beginning of their careers who anticipate an increase in income in the future.
For those unable to invest a large sum initially.
For those willing to increase their SIP contribution annually.
For those aiming to build a substantial investment corpus over the long term.