SIP Calculator: Can a fund of Rs 10 lakh be created by investing just Rs 5,000 in SIP? Know how you can achieve this with different return rates and investment strategies. Also, how much risk will be there in this and what things need to be kept in mind.
SIP Calculator: If you do a SIP (Systematic Investment Plan) of ₹5,000 every month, can you create a fund of ₹10 lakh? The answer is – yes, you can definitely do it. But it depends on how many years you invest and how much return you will get on it.
How much return is possible in SIP?
The returns received in SIP are not fixed. It depends largely on the market movement. But if we look at the average of the last 10–15 years, equity mutual funds have given an average annual return of up to 12%.
We will consider three different returns:
- 8% (from a defensive perspective)
- 10% (moderate estimate)
- 12% (aggressive estimate)
How long will it take to create a fund of ₹10 lakh?
| Monthly SIP | Estimated Returns |
Time to make ₹10 lakh
|
| ₹5,000 | 8% | 11 years 10 months |
| ₹5,000 | 10% | 10 years 3 months |
| ₹5,000 | 12% | 9 years 1 month |
Note: This calculation is based on the compounding theory. Taxes, fund management fees or market volatility are not included in it.
Is it wise to increase SIP every year?
If you increase your SIP by 10% every year. For example, ₹5,500 next year, then ₹6,050, then the target of ₹10 lakh can be achieved sooner. In about 7–8 years. This is called Step-up SIP, and it is an excellent method for long-term goals.
What type of funds to choose?
If you do SIP with ₹5,000, then Large & Mid Cap or Flexi Cap Funds can be good options. These are neither very risky nor give very low returns. If you opt for Small Cap or Mid Cap Funds, you can get higher returns. However, the risk is also higher in this.
What is SIP?
SIP or Systematic Investment Plan is a method of investment to create a large fund in the long term. In this, you invest a fixed amount every month in a mutual fund, due to which your capital increases over time. The purpose of SIP is that you can develop the habit of investing without investing a large lump sum amount.
This method gives the advantage of rupee cost averaging and compounding, which can give good returns in the long run. SIP is especially beneficial for those who want to create a large fund in the long term with discipline.
The real benefit of SIP is seen when you continue it for a long time. This investment becomes a habit and the investment continues even during market fluctuations, which gives the benefit of Rupee Cost Averaging.
Disclaimer: The information provided here is for information purposes only. It is important to note here that investing in the market is subject to market risks. Always seek expert advice before investing as an investor. Businessleague.in never recommends investing money to anyone.
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