A Systematic Investment Plan (SIP) is an automated investment plan designed to help you conveniently invest a fixed amount into your chosen mutual funds at regular intervals. Significantly, it operates similarly to a recurring deposit in a bank, ensuring a steady investment process.
One of the biggest advantages of an SIP is the convenience it provides. The specified amount is automatically transitioned from your savings bank account to your chosen mutual fund at the intervals you select, be it daily, weekly, monthly, or quarterly. The frequency is chosen by you, but monthly SIPs are the most popular since they can coincide with your salary cycle.
A notable feature of SIPs is their ability to generate significant gains over time even with a minimal investment. As per FundsIndia report, for instance, a small amount like Rs 1,000 saved every month can lead to significant gains over time. If you were to invest Rs 1,000 per month into an equity SIP over a span of 30 years at 12 per cent per annum, you would have invested only Rs 3.6 lakhs. However, your portfolio's value would have grown to an impressive Rs 34.9 lakhs.
If you were to stay invested for a shorter duration, say 20 years, you'd invest Rs 2,40,000, but your portfolio value would be Rs 9.89 lakh. A decade-long investment of Rs 1,000 per month would equal Rs. 2,30,038, as compared to Rs. 1,20,000 invested over the same period.
SIPs allow for flexibility in investment. You can invest in large cap, mid cap or small cap funds, depending on your risk profile. But what truly sets SIPs apart, is the growth of wealth via the power of compounding. Essentially, you earn returns not just on the invested amount, but also on the gains, thanks to the reinvestment of the gains back into the fund. By regularly investing through a SIP, you're allowing smaller investments to gradually build into a substantial sum over time, showcasing the multiplier effect of compounding. The longer your money stays invested, the larger this effect becomes, as per FundsIndia report.
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FAQs
If you invest Rs 1000 for 20 years , if we assume 12 % return , you would get Approx Rs 9.2 lakhs. Invested amount Rs 2.4 Lakh. Hope that helps.
What happens if I invest $1000 a month in SIP for 10 years? ›
A decade-long investment of Rs 1,000 per month would equal Rs. 2,30,038, as compared to Rs. 1,20,000 invested over the same period. SIPs allow for flexibility in investment.
What if I invest $1000 a month in mutual funds for 20 years? ›
Investing $1,000 a month for 20 years would leave you with around $687,306. The specific amount you end up with depends on your returns -- the S&P 500 has averaged 10% returns over the last 50 years. The more you invest (and the earlier), the more you can take advantage of compound growth.
How much return in SIP for 20 years? ›
On average, this fund category (Equity – Consumption) has yielded a return of 18.89% per annum in the last 20 years. A SIP of Rs. 2500 per month would become Rs. 65.84 Lakhs in 20 years.
How much should I invest to get 10 crore in 20 years? ›
For instance, more conservative investor aiming for 9% yearly return may need to set aside approximately ₹1.5 lakhs every month to reach ₹10 crore target in 20 years. On other hand, more aggressive investor targeting 12% annual return may require monthly SIP of around ₹1 lakh.
How to make 10 crore in 10 years by SIP? ›
Assuming an expected return rate of 12 per cent per year, an investor would need to invest Rs 4.34 lakh per month in equity funds through SIP to create a corpus of over Rs 10 crore in 10 years.
How much do I need to invest monthly to be a millionaire in 20 years? ›
Given an average 10% rate of return on the S&P 500, you need to save about $1,400 per month in order to save up $1 million over 20 years. That's a lot of money, but the good news is that changing the variables even a little bit can make a big difference.
What happens if you invest 10000 every month for 20 years? ›
At the end of the 20th year of your investment, your corpus will reach around Rs 1 crore. If you continue this investment for another 10 years, or a total of 30 years, your wealth will grow much faster.
What happens if I invest 20000 a month in SIP for 10 years? ›
A monthly SIP of Rs 20,000 in Quant Small Cap Fund would have grown to Rs 1.04 crore in the last 10 years. The scheme gave an XIRR of 27.73% in the same period. Quant ELSS Tax Saver Fund would have turned a monthly SIP of Rs 20,000 into Rs 95.38 lakh with an XIRR of 26.04% in the last 10 years.
How much is $5000 for 5 years in SIP? ›
How much is Rs. 5,000 for 5 years in SIP? If you invest Rs. 5,000 per month through SIP for 5 years, assuming 12% return. The estimate total returns will be Rs. 1,12,432 and the estimate future value of your investment will be Rs. 4,12,431.
Whether SIP is better than FD depends on your investment goals, horizon and risk tolerance. SIPs offer higher potential returns with more risk, while FDs provide stable, but usually lower, returns.
Which SIP is best for $1000 per month? ›
Details of Best SIP Plans for 1000 per Month
- Kotak Life – Frontline Equity Fund. ...
- Bajaj Life – Accelerator Mid-cap Fund II. ...
- Bajaj Life – Pure Stock Fund. ...
- Quant Active Fund. ...
- Parag Parikh Flexi Cap Fund. ...
- Quant Focused Fund. ...
- Edelweiss Large & Mid Cap Fund. ...
- Kotak Equity Opportunities Fund.
At the end of the 20th year of your investment, your corpus will reach around Rs 1 crore. If you continue this investment for another 10 years, or a total of 30 years, your wealth will grow much faster.
How much is $500 a month invested for 20 years? ›
What happens when you invest $500 a month
| Rate of return | 10 years | 20 years |
|---|
| 4% | $72,000 | $178,700 |
| 6% | $79,000 | $220,700 |
| 8% | $86,900 | $274,600 |
| 10% | $95,600 | $343,700 |
Nov 15, 2023
Consistent adherence to this strategy can lead to significant wealth accumulation. This can be easily achieved if one is consistent in their SIP investment. Utilising the SIP calculator, an investment of Rs 15,000 monthly over a duration of 15 years results in a total capital outlay of Rs 27,00,000.
How much is $100 a month for 20 years? ›
After 20 years, you will have paid 20 x 12 x $100 = $24,000 into the fund. However, the compounding return will more than double your investment.
