Can a Monthly 10,000 SIP for 20 years make you rich. How much return can you generate and what to expect from a SIP are the obvious questions from a beginner. The 10000 SIP for 20 year can grow to 96 lac and more at a safe return of 12% ( as per the real charts).
However, these returns and the money value can be increased with right and smart money moves.
Table of Contents
What is SIP?
SIP full form is systematic Investment Plan. Basically, SIP is a facility to invest in mutual funds on monthly or periodically( weekly, quarterly, half yearly, yearly) basis.
You have to choose payment ( SIP) amount, duration of SIP and mutual fund scheme to start a SIP. Basically it is a disciplined investment style which enables investor to invest a fixed amount at pre defined intervals.
For instance one can start a SIP of 10000 for 20 years or 1,2,……,10, 20, 30 or any other period.
Read more about
Step by step procedure to start SIP
10000 SIP for 20 Years
One can choose any duration as per own wish but ideally the SIP duration should be linked to future life goals. This makes it easier to know the duration of your investment too.
SIP of 10000 for 20 years Chart
Here, is what you can make with 10000 SIP for 20 years. If one invest Rs 10000 per month for a period of 20 years, he/she can make wealth of 92 lac + amount.
The return is calculated at a safe interest rate of 12%. The SIP return is never guaranteed, but on an average one may get about 12% CAGR returns in long duration of 20 years.
These are the hypothetical assumption of 12%return. Next, we will check it with original returns also.
Don’t believe me. Let us check real life fund performance for 15 and 20 year.
10000 SIP for 15 years
Here is the real growth rate of a moderate risk fund ( dynamic Asset Allocation Fund). The time period is from 1 Jan 2007 to till date.
The annual returns are 11.76%.
The total investment amount is Rs 18.70 lac.
Money value is 50.32 lac in time span of 15 plus years.
SIP for 20 Years Returns?
If you start SIP for 20 years the returns may vary from fund to fund. But to give you a fair idea about the SIP for 20 years Returns a screenshot for Return of HDFC Index fund performance is given below.
20000 SIP for 20 years, the total invested amount of 24 lac turned to 95.52 lac.
Isn’t it amazing. The return is 12.3% per annum. so roughly you can say that the average SIP return in 20 years is approx. 12% per annum.
However, nothing is guaranteed either. In other words, you can say it is calculative risk which one can take for investing purpose.
Isn’t it super easy.
FAQ
Which SIP is best for 20 years?
If the investment duration is 20 year long then Equity Mutual funds are the best option to Invest in. One can choose one or multiple funds to invest in this amount. Based on your risk profile you can choose from large, mid, multi, Flexi,small cap funds. If risk profile permit then one may also invest in contra funds, sectoral funds etc.
Can SIP make you rich?
Of course, SIP in right fund for long duration can definitely make you rich. Please refer the screenshots for a clear picture of how rich you can become with your investments.
Is 10000 a good investment amount?
10000 can be a good investment amount to start with. But, ideally one should increase the investment amount periodically. Whether this amount will be sufficient for you in future, depends on your future life goals and their cost.
Do your goal-based investment planning to obtain the best estimate of how much to invest. You can get this service from BestinvestIndia.
For instance, it might be sufficient for a lower middle class person but might not be sufficient for upper middle class person. It all depends on you goals.
Is it realistic to take 18% return for SIP?
While writing this blog post, I had seen blog post which were showing calculations on 18 %. In my view, This much high return 18% assumption is not good from customer point of view.
Since, you are investing in a market linked product. It’s better to keep your expectations low and realistic instead of assuming a very high return.
You may get high return but it should not be implied in the mind that you will get 18-20% returns from your SIP investments.
I think, it is unrealistic.
Points to ponder Before making any conclusion
- The fund returns may change. It all depends on fund you have chosen.
- These returns may turn low if you withdraw during the market slowdown ( bear phase).
- The returns are never guaranteed in nature.
- The return shown above are from Index fund and dynamic asset allocation funds, which are equity oriented funds.
- The returns from debt oriented funds might be lower than this.
- The returns of high risk funds such as mid cap, small cap, sectoral fund may be more or less than the shown.
- But irrespective of all good and bad points, mutual fund is a good vehicle to invest in your money.
Not satisfied with 12% returns.
Top 5 Practical ways to increase SIP Returns
There are practical ways through which one can increase SIP returns. Believe me, it works.
Increase SIP Amount Every year
We grow in career, salary and business, but remain stagnant with our investments. But if you increase SIP amount every year with meagre increase of 10%, your maturity amount will increase dramatically.
But 10% increase looks theoretical in nature. What about increasing SIP by 2000, 5000, 7000, or 10000. Its.t it easy.
There is one easy way to increase your SIP every year. While initiating a SIP, You can choose Step Up SIP option. It is automatic instruction to your fund house and bank to deduct the increased amount every year.
Not comfortable.
Don’t worry AMC will inform you regarding this. Otherwise, you can choose to increase by a fixed amount also.
Increasing returns from SIP by increasing SIP amount periodically, is no rocket science but simple discipline only.
It’s a MIND Game instead.
Invest Additional Amount every year
Decide to invest a additional amount every year to your SIP fund and thus your returns and money will grow like anything.
Not comfortable? Another way…
Pledge a fixed percentile of Bonus Money
Ok, don’t get me wrong. If not comfortable with the above idea then can invest some amount of your bonus. If not the entire bonus amount.
Don’t want to invest more.
Portfolio Review ( Expert Recommendation)
Spend some money and take expert advice while choosing the funds. To boost your SIP returns, it’s best to get your investment reviewed by an Expert in this field.
Basically Portfolio Review ( Portfolio X Ray) is a service which suggest you to remove the low performing mutual funds from your portfolio and add the new better funds for your investments.
It also maintains an asset allocation of the portfolio so that returns can be increased safely. We, at BestInvestIndia provide Portfolio Review Service. Portfolio Review improve your overall portfolio health.
But if only portfolio health is not sufficient. One should improve overall financial Health by having a financial blueprint.
Invest in Booster SIP
ICICI Prudential has launched a new facility called ICICI Prudential Booster SIP ( Systematic Investment Plan). Booster SIP is basically a combination of SIP and STP wherein you start a SIP in a source scheme and a variable amount is shifted to target scheme, based on Equity Valuation index( EVI).
