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A successful investment journey depends mainly on discipline and consistency. Imagine that you start an SIP of Rs 5,000 or Rs 10,000 and after a few years you have a big corpus of Rs 1 crore. Yes, this can be achieved with disciplined investment and patience through SIP i.e. Systematic Investment Plan.
Today when inflation and uncertainty of the future bothers everyone, smart savings made with small amounts can make a big dream come true. SIP is a strong step on the same path, in which you invest a fixed amount every month, and over time this small amount turns into a big capital – that too through the magic of compounding.
Why is SIP becoming people’s first choice?
Mutual fund SIPs have grown in popularity in the last few years. Not just in metro cities, people in smaller towns and cities are also investing through SIPs. The reason for this is clear – easy process, convenience of regular investment and new options being offered by mutual fund companies.
People are realising that SIPs not only help them grow their savings, but also help them build a strong financial foundation over time. However, it is also important to keep in mind your risk appetite and financial goals before making any investment.
How much returns mutual fund SIPs can generate usually?
In this article, we have assumed a 15% annual return (CAGR) to achieve a target of Rs1 crore. But the truth is that markets are not stable – fluctuations are common. It would not be right to assume that every fund will give more than 15% return every year.
Yes, it is true that many midcap, smallcap and some sectoral funds have given returns of 15% or more in the last decade. For example, Nifty Midcap 150 TRI Index has given an average return of 17-18% over 10 years. But there is no guarantee that this performance will be repeated in the future.
So, how long will it take to make Rs 1 crore through SIP?
If you assume a 15% annual return, let’s see how much time it will take for different monthly SIP amounts:
Rs 5,000 per month SIP
Time to reach target: 22 years
Total investment: Rs 13.20 lakh
Expected return: Rs 90.33 lakh
Total fund value: Rs 1.04 crore
Rs 10,000 per month SIP
Time to reach target: 18 years
Total investment: Rs 21.60 lakh
Expected return: Rs 88.82 lakh
Total fund value: Rs 1.10 crore
Rs 20,000 per month SIP
Time to reach target: 14 years
Total investment: Rs 33.60 lakh
Expected return: Rs 80.78 lakh
Total fund value: Rs 1.14 crore
These numbers prove that if you start with a small amount and invest regularly over a long period of time, you can lay the foundation for a strong financial future. The biggest advantage of SIP is that you learn to invest gradually, and over time your money works for you.
But remember — 15% returns are not a guarantee. It is just an estimate that some funds have given in the past. The right strategy is to choose funds wisely, review your portfolio from time to time and keep moving according to your investment goal.
