Can your Rs 10,000 step-up SIP investment today help you achieve a monthly income of Rs 1.05 lakh for 20 years? If you allow your investment some time to grow, it just might be possible. By combining a systematic investment plan (SIP) and systematic withdrawal plan (SWP) in mutual funds, you could hit that Rs 1.05 lakh monthly income goal in 20 years. Over the first 20 years, you could build a corpus of around Rs 1.48 crore, and in the following 20 years, you could withdraw more than Rs 1 lakh each month from that same corpus. Let’s see how!
Rs 1.48 crore corpus from Rs 10,000 monthly step up SIP
A step-up SIP lets you gradually increase your investment amount. You can boost your investment each year as your salary or income rises. You can start an SIP in equity, hybrid or debt mutual funds, but if you’re looking at a long-term investment, an equity fund might be the best bet for growing your corpus.
Also Read: What should you do with your gold investments after PM Modi urges people to postpone gold purchases?
If you begin with a Rs 10,000 SIP in an equity mutual fund, where your annual step- up is 7% and the expected annualised return is 12%, you could end up with a corpus of nearly Rs 1.48 crore in 20 years.
| Particulars | Details |
| Starting SIP | Rs 10,000 |
| Annual step up | 7% |
| Expected annualised return | 12% |
| Investment period | 20 years |
| Retirement corpus | Rs 1.48 crore (approximately) |
Rs 1.05 monthly income from Rs 1.48 crore corpus
SWP is a process to withdraw an income periodically from a lump sum investment in a mutual fund. If you invest the Rs 1.48 crore corpus in a debt fund, start an SWP and get an annualised return of 6% from your investments, you can get a Rs 1.05 lakh monthly income for 20 years.
| Particulars | Details |
| Investment | Rs 1.48 crore |
| Expected return | 6% |
| Monthly income | Rs 1.05 lakh/month |
| Investment duration | 20 years |
| Money left after withdrawal | Rs 66,704 |
Mistakes that you should not make for retirement planning
Long -term investment horizon works well
Rohan Goyal, investment research analyst, MIRA Money, told ET Wealth Online that one should use their working years to build a corpus through SIPs and then use an SWP to withdraw from the corpus for their retirement without ever liquidating the whole portfolio at once.
Also Read: What should you do with your gold investments as gold import duty increases to 15%?
Giving an example, Vinayak Magotra, product head & founding team, Centricity WealthTech, says consider a 30-year-old investor initiating a monthly SIP of Rs 25,000. Over a 25-year horizon, assuming a disciplined diversified equity allocation with an annualised return of 12%, the projected corpus would grow to approximately Rs 4.75 crores.
Which mutual funds are suitable for SIP and SWP investments?
Swapnil Aggarwal, director, VSRK Capital, says for a long investment horizon of around 25 years, SIP investments can primarily focus on equity-oriented funds such as flexi-cap, index and large and mid-cap funds, as these categories have the potential to generate long-term wealth and outperform inflation.
“During the SWP phase, retirees can consider a balanced mix of conservative hybrid funds, short-duration debt funds, and select equity exposure to maintain regular income while allowing the corpus to continue growing,” says Aggarwal.
Be realistic about your SIP returns and SWP withdrawal rate
Aggarwal says return expectations from SIP and SWP should be realistic and aligned with long-term retirement goals rather than short-term market performance.
“SIP investments in a diversified equity-oriented portfolio may aim for long-term annualised returns in the range of 10–12%. SWP strategies should generally follow a sustainable withdrawal rate, often around 3–5% annually, to help ensure the corpus lasts for 25–30 years or more,” says Aggarwal.
In the story, we have given calculations for a Rs 1.05 lakh flat monthly income for 20 years. What Aggarwal suggests here is that a person should withdraw 3-5% of the retirement corpus annually to sustain the amount for 25-30 years.
Magotra opines realistic expectations from SIPs can range from 10-12% (annualised) over market cycles.
For SWP, Magotra suggests a withdrawal rate anywhere between 3-5% is considered comfortable.
Goyal suggests a 11-13% CAGR for the SIP investment. “Using 12% as a base case and 10% as a conservative scenario gives a useful range for projections,” says Goyal.
For SWP, Goyal advises a 4-5% annual withdrawal rate of the corpus.
Mistakes to avoid in SIP, SWP investments
Aggarwal says a common mistake investors make with SIPs is stopping investments during market downturns due to panic, instead of benefiting from rupee cost averaging.
In SWPs, Aggarwal says investors often withdraw excessively without considering inflation, market volatility, or the sustainability of their corpus, which can reduce long-term wealth.
As per Magotra, many portfolios lack proper diversification, which leave them exposed to concentration risks during market downturns.
Goyal says many investors start late, ending up creating inadequate corpus for their retirement.
“An SIP started at 30 versus one started at 40 does not produce twice the corpus, it produces three to four times the corpus, because compounding is exponential. Every year of delay is disproportionately costly,” Goyal explains.
