Power of SIP: What will be your returns in 15, 20, 25 years on monthly investment of Rs 6,500?
Discover the power of SIP! See how a monthly investment of Rs 6,500 can grow over 15, 20 and 25 years, leveraging compounding and rupee cost averaging for substantial wealth creation.
A Systematic Investment Plan (SIP) is one of the smartest ways to build wealth over time. By investing just Rs 6,500 per month, you can create a significant financial corpus over 15, 20 or 25 years. SIPs offer benefits like rupee cost averaging and compounding, ensuring steady growth even in volatile markets. In this article, we’ll break down the potential returns of SIP investments and explain why starting early can maximise your wealth.
What is a Systematic Investment Plan (SIP)?
A Systematic Investment Plan (SIP) is a disciplined approach to investing in mutual funds. Investors contribute a fixed amount at regular intervals, reducing market timing risks and ensuring consistent wealth accumulation.
How Does SIP Work?
- The chosen SIP amount is auto-debited from your bank account.
- The investment is used to purchase mutual fund units based on the prevailing Net Asset Value (NAV).
- Over time, units accumulate, and the power of compounding helps grow wealth significantly.
When is the right time to start an SIP?
The best time to start an SIP is as early as possible. The longer your investment horizon, the better the returns due to compounding. SIPs ensure minimum risk and work well for long-term financial goals.
Types of SIPs: Choose the right one
- Top-up SIP: Allows increasing investment periodically.
- Flexible SIP: Adjust investment amount based on cash flow.
- Perpetual SIP: No fixed end date, allowing long-term wealth creation.
Key benefits of SIP investments
- Promotes financial discipline with automated investments.
- No need to time the market, reducing investment stress.
- Ideal for new investors without deep market knowledge.
Rupee Cost Averaging
SIPs benefit from rupee cost averaging, where you buy more units when the market is low and fewer when it’s high. This reduces the overall investment cost per unit over time.
How much will you earn in 15 years with SIP?
- Monthly SIP: Rs 6,500
- Total Invested: Rs 11,70,000
- Estimated Return: Rs 21,09,744
- Total Value: Rs 32,79,744
SIP returns in 20 years
- Monthly SIP: Rs 6,500
- Total Invested: Rs 15,60,000
- Estimated Return: Rs 49,34,461
- Total Value: Rs 64,94,461
SIP Returns in 25 Years
- Monthly SIP: Rs 6,500
- Total Invested: Rs 19,50,000
- Estimated Return: Rs 1,03,84,628
- Total Value: Rs 1,23,34,628
Why SIP is the best investment strategy?
- Ideal for long-term wealth creation.
- Reduces risks associated with market fluctuations.
- Helps achieve financial goals like retirement planning, child education, and home buying.