Last Updated:
SIP helps investors build wealth by investing small amounts regularly in equity or bond markets. Even Rs 100 or Rs 500 monthly can grow significantly over 5, 10, or 15 years.
SIP is a great tool to build long-term wealth. (Representative Image)
SIP Investment: SIP (Systematic Investment Plan) is a silent wealth-building tool for investors. It not only allows investors to invest in the equity/bond market without prior knowledge, but also makes them disciplined and habitual savers.
Understandably, there are a lot of expenses on a daily basis, from groceries to services, draining our hard-earned money. With that, rent, EMIs and subscriptions turn our wallets empty at the end of every month. And it’s a vicious cycle running month by month.
SIP comes as a savior to help as an invisible hand, stopping you from frivolous spending and keeping aside a particular amount for the future. No matter how small the investment amount, it will not help you build a corpus but also hedge you against inflation, so you won’t lose the purchasing power of the money from the rising cost of living and decreasing value of paper money.
Investors tend to assume that they require a good amount each month for SIPs to build a good corpus, which is enough for their retirement. That’s a myth.
Even a small amount of savings such as Rs 100 or Rs 500 via SIP will help you build a good corpus in the next five or 10 years. Indeed, it happens. Equity market investment is a long-term game, as Warren Buffett famously calls it transfer of wealth from impatient to patient. Moreover, the magic of compound works in the long run, which multiplies not only your investment but the interest on investment.
How Much Your Rs 100, Rs 500 and Rs 1000 SIPs Would Grow In 5, 10 and 15 Years?
For instance, a Rs 100 monthly SIP at a 12% annual return will grow to approximately Rs 8,276 in 5 years, Rs 23,351 in 10 years, and Rs 50,630 in 15 years.
If the monthly SIP is raised to Rs 500, the returns become significantly larger. In 5 years, the investment grows to around Rs 41,380. Over a 10-year period, it reaches Rs 1.16 lakh, and in 15 years, the investor would have built a corpus of over Rs 2.53 lakh.
For those able to contribute Rs 1,000 a month, the rewards are even more attractive. After 5 years, the SIP grows to Rs 82,760. At the 10-year mark, it becomes Rs 2.33 lakh, and in 15 years, the investment turns into a sizeable Rs 5.06 lakh.
These estimates are based on the standard SIP calculation formula used by financial portals and tools such as the one on SEBI’s investor website. The assumed return rate of 12% is commonly aligned with long-term equity mutual fund performance.
Note that you should also keep inflation in mind while calculating your plans for wealth-building.
Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.
Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the Indian Inst…Read More
Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the Indian Inst… Read More
view comments
- First Published: