Many people in India still don’t know the power of Systematic Investment Plans (SIPs). Even fewer are aware of the simple yet powerful 5x12x40 SIP formula — a strategy that can turn a modest ₹5,000 monthly investment into a ₹6 crore corpus over time. Yes, you read that right!
Whether you’re a young parent, a first-time investor, or a financial planner, understanding this formula can change the way you think about wealth creation. Let’s break it down in the simplest way possible.
5x12x40 SIP Formula Explained
| Feature | Details |
|---|---|
| What is the formula? | Invest ₹5,000 per month for 40 years at 12% annual return |
| Monthly Investment | ₹5,000 |
| Annual Return Expected | 12% (compounded annually) |
| Investment Duration | 40 years |
| Estimated Wealth | ₹5.94 crore – ₹6 crore |
| Total Invested Amount | ₹24,00,000 |
| Power of Compounding | 25x growth of principal |
| Best suited for | Long-term investors, parents planning for children, retirement planners |
The 5x12x40 SIP formula isn’t just a strategy — it’s a long-term mindset for wealth creation. With a modest monthly investment of just ₹5,000 and a little patience, you can build a fund worth ₹6 crore. Whether for your child’s future, retirement planning, or building generational wealth — this is one of the simplest and most powerful investment plans available to Indian investors.
What is the 5x12x40 SIP Formula?
Let’s decode this:
- 5 = ₹5,000 per month
- 12 = 12% annual expected return
- 40 = 40 years of investment
This simple formula shows how consistent, small savings — when invested with discipline and patience — can make you or your children multi-crore wealth owners. This strategy works through the power of compounding — earning interest on interest, year after year.
see also: Get More Than ₹27 Lakh on Depositing ₹1 Lakh in This Great Scheme
Why ₹5,000 per Month Can Make You a Crorepati
You might be wondering — how can just ₹5,000 every month turn into ₹6 crore?
Let’s understand this with an example.
SIP Future Value Formula:
The future value of your SIP is calculated using:
FV = P × [(1 + r)^n – 1 ÷ r] × (1 + r)
Where:
- P = Monthly Investment = ₹5,000
- r = Monthly Rate = 12% ÷ 12 = 1% or 0.01
- n = Total Months = 40 years × 12 = 480 months
FV ≈ ₹5,000 × [(1.01)^480 – 1 ÷ 0.01] × 1.01
FV ≈ ₹5.94 crore
So, by investing just ₹5,000 per month, your money multiplies nearly 25 times!
The Power of Long-Term Investing
Here’s a look at how time plays a key role in wealth building:
| Years Invested | Total Invested | Estimated Corpus (at 12%) |
|---|---|---|
| 10 years | ₹6,00,000 | ₹11.6 lakh |
| 20 years | ₹12,00,000 | ₹49.9 lakh |
| 30 years | ₹18,00,000 | ₹1.76 crore |
| 40 years | ₹24,00,000 | ₹5.94 crore |
The real magic happens in the last 10 years. That’s the power of compounding. The earlier you start, the more wealth you accumulate.
Planning for Your Child’s Future? Start Now
The 5x12x40 formula is ideal for parents. Start a SIP when your child is born. By the time they turn 40, they will have nearly ₹6 crore in their hands — enough for retirement, business, or future security. Even if you can’t go for 40 years, starting for 20 or 30 years can still build life-changing wealth.
Practical Steps to Start SIP Using 5x12x40 Strategy
Here’s how you can put the formula into action:
Step 1: Choose a Good Mutual Fund
Opt for equity mutual funds for long-term SIPs. Look for funds with a strong 10+ year performance record. Popular fund categories include:
- Large Cap Funds
- Flexi Cap Funds
- Index Funds (Nifty 50, Sensex)
Step 2: Use a Reliable Investment Platform
You can invest directly using:
- Groww
- Zerodha Coin
- ET Money
These platforms provide zero-commission direct plans with easy tracking features.
Step 3: Set Up Auto-Debit
Use auto-debit from your bank account to avoid missing monthly payments.
Step 4: Be Patient and Stay Consistent
Avoid early withdrawals. The real returns come in the final years due to compounding. Stick to your plan.
Alternative SIP Calculations: What If You Invest More?
Let’s say you can invest more than ₹5,000/month. Here’s what happens:
| Monthly SIP | Duration | Estimated Value @12% |
|---|---|---|
| ₹5,000 | 40 years | ₹5.94 crore |
| ₹10,000 | 40 years | ₹11.88 crore |
| ₹15,000 | 40 years | ₹17.82 crore |
| ₹20,000 | 40 years | ₹23.76 crore |
The longer and more consistently you invest, the more your wealth multiplies.
Real-Life Example
Ankit, a 30-year-old IT professional, started investing ₹5,000/month in SIPs in 2025. By the time he turns 70, his total investment of ₹24 lakh would grow to approximately ₹6 crore. This wealth will support:
- His child’s education
- Retirement lifestyle
- Emergency medical care
- A backup fund for entrepreneurship
see also: Great Scheme of Post Office Will Turn 6 thousand Into 50 Lakhs
5x12x40 SIP Formula FAQs
Q. What if I start late?
You can still benefit from SIPs, but your final corpus will be smaller. To compensate, increase your monthly SIP.
Q. Is 12% return guaranteed?
No. It’s an estimated historical average of equity mutual funds. Returns may vary based on market performance.
Q. Are SIPs risky?
SIPs in equity funds have market risks, but long-term SIPs reduce volatility through rupee cost averaging.
Q. Can I withdraw SIP money anytime?
Yes. SIPs are flexible and offer liquidity. But to get the best returns, avoid early withdrawals.
Q. What if I miss a few SIP payments?
Missing 1–2 payments won’t make a huge difference. Resume as soon as possible and stay disciplined.
