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? ›
(You must convert the rate of return to the monthly figure through dividing by 12). You also have n = 10 years or 120 months. FV = Rs 1,84,170. So, the future value of a SIP investment of Rs 1,000 per month for 10 years at an estimated rate of return of 8% is Rs 1,84,170.
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? ›
50,000 per month with an annual return of 12%. Thus, a total investment of Rs. 1,20,00,000 will finally give you a corpus of Rs. 5 Crore after 20 years.
Which SIP is best for 20 years in India? ›
Top SIP Plans for 20 Years in India
| Name of the Fund | Fund Size (in Rs. Crores) | 1-Year Returns (%) |
|---|
| Canara Robeco Bluechip Equity Fund | 10,090 | 13.97 |
| ICICI Prudential Value Discovery Fund | 32,754 | 24.29 |
| Nippon India Large Cap Fund | 15,855 | 22.71 |
| HDFC Flexi Cap Fund | 38,668 | 22.04 |
1 more rowJust ₹66,000 per month can help you reach ten crore in 20 years. To reach the ten crore corpus, you'll have to invest about 1.31 lakhs every month. The decision comes down to whether I'm willing to take a bit more risk because I have a slightly longer timeframe for it to unfold.
What happens if I invest $1000 in SIP for 20 years? ›
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.
What if I invest 1000 a month in SIP for 30 years? ›
On how much return one can expect from one's monthly equity mutual funds SIP of ₹1,000 for 30 years; Vinit Khandare, CEO & Founder at MyFundBazaar India Private Limited said, "Keeping a monthly equity mutual fund SIP amount of ₹1000 for a tenure of 30 years, an investor could expect a corpus of ₹63,55,414, assuming the ...
What is the return of SIP 1000 per month for 10 years? ›
Best SIP Plans for 1,000 Per Month in 2024
| Returns |
|---|
| Fund Name | 5 Years | 10 Years |
|---|
| Active Fund QUANT | 27.80% | 23.96% |
| Large and Mid Cap Fund QUANT | 23.27% | 22.69% |
| Flexi Cap Fund PARAG PARIKH | 23.90% | 20.22% |
7 more rowsThe Best Ways To Turn $1,000 Into $10,000
- Retail Arbitrage.
- Invest In Real Estate.
- Invest In Stocks & ETFs.
- Start A Side Hustle.
- Start An Online Business.
- Invest In Alternative Assets.
- Learn A New Skill.
- Try Peer-to-Peer Lending.
In fact, at the end of the five years, if you invest $1,000 per month you would have $83,156.62 in your investment account, according to the SIP calculator (assuming a yearly rate of return of 11.97% and quarterly compounding).
What if I invested $1000 in S&P 500 10 years ago? ›
Over the past decade, you would have done even better, as the S&P 500 posted an average annual return of a whopping 12.68%. Here's how much your account balance would be now if you were invested over the past 10 years: $1,000 would grow to $3,300. $5,000 would grow to $16,498.
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.
What happens if I invest $20,000 a month in SIP for 10 years? ›
Given that performance, if one would started investing Rs 20,000 monthly through SIP in this fund 10 years ago, they would have got Rs 1.01 crore with capital gains of Rs 77.18 lakh. The expense ratio of the scheme is 0.77 per cent against the category average of 0.62 per cent.
What if I invest $5,000 in SIP for 10 years? ›
The SIP calculator shows that a monthly investment of Rs 5000 in the direct plan of this scheme would have grown to approx. Rs 30.5 lakh in 10 years. Monthly SIP of Rs 5000 in the regular plan would have grown to approx. Rs 28.6 lakh in 10 years.
How much will I get if I invest $1000 in SIP? ›
Take for example you want to invest Rs. 1,000 per month for 12 months at a periodic rate of interest of 12%. which gives Rs 12,809 Rs approximately in a year. The rate of interest on a SIP will differ as per market conditions.
What happens if I invest $1000 a month in SIP for 15 years? ›
As seen in above video, you can get approximately Rs. 5.04 Lacs as maturity amount by just investing Rs. 1000 per month as SIP for next 15 years. Your total deposits will be Rs.
What if I invest $5,000 in SIP for 20 years? ›
If someone begins a SIP of 5000 per month for a span of 20 years, at 12% assumed annualized rate of return per annum, your total investment in 20 years is Rs. 12 lakh and the accumulated corpus at the end of tenure is close to Rs. 50 lakhs.
Is it good to do SIP for 20 years? ›
Investing in mutual fund through SIP for long term is a gateway of wealth creation. 20 years is a really long time to make your small investment turn into a big corpus. Staying long in mutual fund help accumulating wealth by compounding factor.
