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 happens 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.
What happens if I invest $20,000 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 will $1,000 invested be worth in 20 years? ›
As you will see, the future value of $1,000 over 20 years can range from $1,485.95 to $190,049.64.
| Discount Rate | Present Value | Future Value |
|---|
| 2% | $1,000 | $1,485.95 |
| 3% | $1,000 | $1,806.11 |
| 4% | $1,000 | $2,191.12 |
| 5% | $1,000 | $2,653.30 |
25 more rowsHow much money will I have if I invest $1,000 a month for 30 years? Investing $1,000 a month for 30 years, with an average annual return of 7%, can yield a total of approximately $1.22 million. This calculation shows how regular, long-term investments can grow significantly over time, thanks to compound interest.
Which SIP is best for 20 years? ›
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 rowDetails 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.
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.
How much is $1000 a month for 5 years? ›
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).
The truth is that most investors won't have the money to generate $1,000 per month in dividends; not at first, anyway. Even if you find a market-beating series of investments that average 3% annual yield, you would still need $400,000 in up-front capital to hit your targets.
How much money do I need to invest to make $4000 a month? ›
Making $4,000 a month based on your investments alone is not a small feat. For example, if you have an investment or combination of investments with a 9.5% yield, you would have to invest $500,000 or more potentially. This is a high amount, but could almost guarantee you a $4,000 monthly dividend income.
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.
How to get 50 lakhs in 5 years with SIP? ›
For example, if an individual plan to accumulate ₹50 lakhs over the tenure of 5 years, assuming the individual invests in a Flexicap fund or a Multicap fund which is giving an annualized return of 15%, then the individual needs to invest ₹55,750 per month for 5 years in order to generate the required corpus.
How much SIP will make 10 crore in 10 years? ›
How to accumulate a Rs 10 crore corpus in 10 years? 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.
What is the average return of SIP in 20 years? ›
10 Best SIP Plans for 20 years in India to Invest in 2023
| Scheme Name | AUM (Rs Crore) | 20-Year SIP Return (%)* |
|---|
| ICICI Prudential FMCG Fund | 1,156.49 | 17.76 |
| Sundaram Midcap Fund | 7,048.79 | 17.29 |
| Nippon India Growth Fund | 13,409.61 | 17.04 |
| Quant Active Fund | 3,531.89 | 16.41 |
7 more rowsJan 12, 2024
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 to invest to get 5 crore in 20 years? ›
According to the Upstox SIP calculator, a 40-year-old would need to invest ₹33000 per month for the next 20 years to build a corpus of ₹5 crore by the age of 60, assuming a 15 per cent annual rate of return and monthly compounding.
How much will I have if I invest $100 a month for 20 years? ›
For simplicity's sake, assume that compounding takes place once a year. 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.
