What's the lifetime cost of delaying a ₹10K monthly SIP from 25 to 35?
Scenario
Compare two investors: Early Bird starts ₹10K/month SIP at 25 and continues to 60. Late Starter waits until 35 to start the same ₹10K/month SIP, also continues to 60.
Inputs
- Late start age
- 35
- Retirement age
- 60
- Early start age
- 25
- Monthly sip INR
- 10000
- Assumed return %
- 12
Calculation
- 1.
Early Bird: years compounding
60 − 25 → 35years
- 2.
Late Starter: years compounding
60 − 35 → 25years
- 3.
Early Bird: total nominal contributions
₹10K × 420 months → ₹42.00 L
- 4.
Late Starter: total nominal contributions
₹10K × 300 months → ₹30.00 L
- 5.
Early Bird: 35-year terminal at 12%
₹10K × SIP-FV factor 6420 → ₹6.42 Cr
- 6.
Late Starter: 25-year terminal at 12%
₹10K × SIP-FV factor 1888 → ₹1.89 Cr
- 7.
Cost of 10-year delay
₹6.42 Cr − ₹1.89 Cr → ₹4.53 Cr
Conclusion
The 25-year-old contributes ₹12 lakh more in nominal SIPs but ends up with ₹4.53 crore (240%) MORE terminal wealth than the 35-year-old. The 10 extra compounding years do 80% of the work, not the contributions.
Tradeoffs
Assumes 12% nominal returns hold across 35 years AND the early starter actually sustains the SIP. Behavioural drift over decades is the bigger risk than market underperformance. Auto-debit + 10% annual step-up makes sustaining structurally easier than manual monthly decisions.