SIP is a simple and convenient way to invest in mutual funds. With standing instructions to your bank, a fixed amount is automatically debited every month, saving you the trouble of writing a cheque each time. SIPs are popular among Indian investors because they help average out the cost of investments and encourage regular investing. This approach reduces worries about market ups and downs or trying to time the market.
Monthly systematic investment plans (SIPs) have surpassed the Rs 26,000-crore mark for the first time in December, reflecting the continued interest of small investors in mutual funds for long-term investments, according to data released by the Association of Mutual Funds in India (AMFI) on Thursday. SIP contributions for December 2024 stood at Rs 26,459 crore, up from Rs 25,320 crore in November 2024.
Additionally, mutual fund (MF) folios rose to 22.50 crore in December, compared to 22.02 crore in the previous month.
Month-wise SIP contributions in December 2024 increased by an impressive 50% year-on-year, despite some geopolitical conditions challenging the equity markets globally.
Here, we will check through calculations how many years it would take for an investor to build a corpus of Rs 1 crore by investing Rs 1,000, Rs 2,000, Rs 3,000, and Rs 5,000 per month. This calculation assumes an annualised return of 12% and a 10% increase in the SIP amount every year.
Also read: MFs close 2024 with record Rs 3.9L-crore inflows
How long does it take to build a Rs 1-crore corpus with Rs 1,000, Rs 2,000, Rs 3,000 and Rs 5,000 SIPs?
SIP of Rs 1,000 with a 10% step-up each year
If you invest Rs 1,000 per month with a 10% annual step-up and expect an average return of 12% per year, you can accumulate approximately Rs 1.02 crore in 31 years.
Out of this, your total investment will be around Rs 21.83 lakh, and the remaining Rs 79.95 lakh will come from returns. Total corpus after 31 years comes to Rs 1.02 crore. The calculation is done assuming 12% annualised return on monthly SIP investment, which can be considered as a moderate return considering the performance of most funds in the equity space in the last 10-15 years.
SIP of Rs 2,000 with a 10% step-up each year
If you raise your monthly SIP to Rs 2,000 with the same 10% annual step-up,
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