The systematic investment plan (SIP) strategy is popular among mutual fund investors. While it provides a disciplined approach to investing in mutual funds, it can also help one achieve their short- and long-term financial goals.
Meanwhile, an SIP calculator is a virtual tool that allows investors to evaluate the estimated returns on their SIP investments over a certain period. The calculator employs a mathematical technique to produce an estimate of the total corpus after the investing term. This helps investors plan their SIP investments more effectively.
Here's what you can achieve in 5, 10, 15, 20, or 25 years by investing Rs 25,000 per month in SIP(s).
1. 5 years
If you start investing Rs 25,000 per month for five years and get a 12 per cent average annualised return on your deposits, according to the SIP calculator, your total investment in five years will be Rs 15 lakh.
After five years, you may have capital gains of Rs 5.62 lakh, while your total maturity amount is estimated to be Rs 20.62 lakh.
2. 10 years
If you invest Rs 25,000 monthly for 10 years, the total invested amount would be Rs 30 lakh. At a 12 per cent average return, you can accumulate a total corpus of Rs 58.08 lakh.
Your long-term capital gains in that case are estimated to be Rs 28.08 lakh.
3. 15 years
If you start investing Rs 25,000 per month for 15 years, your total investment in 15 years will be Rs 45 lakh at a 12 per cent annualised return.
After 15 years, you may have capital gains of Rs 81.14 lakh, while your total maturity amount is estimated to be Rs 1.26 crore.
4. 20 years
If you invest for a longer time, like 20 years, your total investment in that period will be Rs 60 lakh. At a 12 per cent average return, you may have capital gains of Rs 1.89 crore, while your total maturity amount is estimated to be Rs 2.49 crore.
5. 25 years
If you start investing Rs 25,000 per month for 25 years, and get a 12 per cent return, your total investment in 25 years will be Rs 75 lakh.
After 25 years, you may have capital gains of Rs 3.99 crore, while your total maturity amount is estimated to be Rs 4.74 crore.
A look at expert's view on SIP investment
AK Nigam, Director of BPN Fincap, says, "SIP is a systematic method of investment. This is helpful in wealth creation in the long term. However, the investor should understand that there is market risk in SIP. The past years' SIP returns in the scheme are never a guarantee of its future returns. Therefore, it is advisable to review the portfolio from time to time."
(Disclaimer: Investing in mutual funds is subject to market risks. Consult your advisor before making any investment.)
