Systematic Investment Plan (SIP) is a popular investment method in India that allows you to invest a fixed amount of money regularly in a mutual fund scheme. SIP inculcates financial discipline and leverages the power of compound interest to grow your wealth significantly over the long term.
This article explores the potential of SIPs to make you a crorepati (someone with Rs 1 crore or more) and compares them to other popular investment options in India.
Returns on SIP Investment (Expected Annual Return 15%)
The table below shows the potential future value of your investment with a monthly SIP of Rs 1,600 at an expected annual return of 15%.
| Duration (Years) | SIP Amount (₹) | Future Value (₹) |
|---|---|---|
| 5 | 1,600 | 1,40,000 |
| 8 | 1,600 | 3,00,000 |
| 10 | 1,600 | 4,50,000 |
| 12 | 1,600 | 6,50,000 |
| 15 | 1,600 | 10,80,000 |
| 18 | 1,600 | 17,70,000 |
| 20 | 1,600 | 24,30,000 |
| 22 | 1,600 | 33,10,000 |
| 25 | 1,600 | 52,50,000 |
| 28 | 1,600 | 82,90,000 |
| 30 | 1,600 | 1,10,00,000 |
Understanding the Table
- The table showcases the potential growth of your investment over various timeframes.
- For instance, a monthly SIP of Rs 1,600 invested for 30 years at an expected annual return of 15% can grow your corpus to Rs 1.1 crore.
Breaking Down the Crorepati Dream with SIP
Let’s delve deeper into the example mentioned earlier (Rs 1.1 crore in 30 years with a monthly SIP of Rs 1,600):
- Expected Amount: Rs 1,12,15,713 (This is the future value of your investment)
- Amount Invested: Rs 5,76,000 (Total SIP contribution over 30 years – 1600 * 12 * 30)
- Wealth Gain: Rs 1,06,39,713 (This is the difference between the expected amount and the amount invested)
SIP vs Popular Investment Options in India
Many Indians opt for traditional investment avenues like small savings schemes. Let’s compare SIPs with some popular options:
| Investment Option | Interest Rate (%) |
|---|---|
| Sukanya Samriddhi Account Scheme | 8.2 |
| Senior Citizen Savings Scheme | 8.2 |
| National Savings Certificate (VIII Issue) | 7.7 |
| Kisan Vikas Patra | 7.5 |
| Mahila Samman Savings Certificate | 7.5 |
SIP Advantages
- Potential for Higher Returns: SIPs in equity mutual funds have the potential to generate higher returns compared to traditional investment options over the long term.
- Rupee-Cost Averaging: SIP allows you to average out the cost of investment by buying units at different NAVs (Net Asset Values). This helps mitigate market volatility.
- Flexibility: You can start with a small amount and gradually increase your SIP contribution as your income grows.
- Disciplined Investing: SIP inculcates financial discipline by setting up an automated investment habit.
Disclaimer: (This information is provided solely for informational purposes. It is important to note that investing in the market or a business idea involves market risks. Before investing money as an investor/ owner/ partner, always consult an expert. DNP News Network Private Limited never advises to invest money on stocks or any specific business idea. We will not be liable for any financial losses.)