How much will a person earn with ₹5,000 monthly SIP in 10, 20 & 30 years?
Investing in a Systematic Investment Plan (SIP) is a popular way to build wealth over time. With a SIP, you invest a fixed amount of money at regular intervals, which helps to average out market fluctuations and reduce the impact of volatility. But how much can you expect to earn with a ₹5,000 monthly SIP invested at 15% per annum?
According to SEBI’s SIP calculator, a person investing ₹5,000 monthly in a SIP at 15% per annum will earn ₹13.76 lakh in 10 years, with a total investment value of ₹6 lakh. But what happens if you invest for a longer period? Let’s find out.
10-year SIP: ₹13.76 lakh with ₹6 lakh investment
As mentioned earlier, a ₹5,000 monthly SIP invested at 15% per annum for 10 years will fetch a return of ₹13.76 lakh. This is a significant amount, considering the total investment value is just ₹6 lakh. This means that the SIP has generated a return of 127.6% over the 10-year period, which is an impressive compounded annual growth rate (CAGR) of 9.45%.
20-year SIP: ₹74.86 lakh with ₹12 lakh investment
Now, let’s move on to the 20-year SIP. With the same investment amount of ₹5,000 per month and an annual return of 15%, the total return would be ₹74.86 lakh. The total investment value in this case is ₹12 lakh, which means that the SIP has generated a return of 523.8% over the 20-year period. The CAGR in this case is 10.33%.
30-year SIP: ₹3.46 crore with ₹18 lakh investment
Finally, let’s look at the 30-year SIP. With the same investment amount of ₹5,000 per month and an annual return of 15%, the total return would be a staggering ₹3.46 crore. The total investment value in this case is ₹18 lakh, which means that the SIP has generated a return of 1,888% over the 30-year period. The CAGR in this case is 11.31%.
As you can see, the longer you invest, the more significant the returns. However, it’s also important to note that investing for a longer period comes with its own set of risks. Market fluctuations can be more pronounced over a longer period, which means that there is a higher chance of volatility. Therefore, it’s essential to have a well-diversified portfolio and a long-term perspective to achieve your financial goals.
Conclusion
Investing in a SIP is a great way to build wealth over time. With a ₹5,000 monthly SIP invested at 15% per annum, you can expect to earn significant returns over a 10, 20, or 30-year period. As we’ve seen, the longer you invest, the more significant the returns. However, it’s essential to have a well-diversified portfolio and a long-term perspective to achieve your financial goals.
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