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A study released by NJ Wealth reveals the power of compounding of SIPs.
The study shows that the SIP of Rs.10,000 in equity funds has grown to Rs.3.71 crore in 25 years. In other words, a total investment of Rs.30 lakh has multiplied by over 12 times in 25 years.
The report said, “In the last 25 years, if you had started a monthly SIP of an equal amount in all available equity schemes, summing up a total of Rs.10,000, the current value of your investment will be Rs.3.71 crore, an annual return of 16.62%.”
During this period, the markets have gone through various bull and bear cycles, including the IT bubble, the housing crash, and the coronavirus pandemic, yet the returns have been exemplary, said the report.
The report said that even if an individual invests in worst performing scheme to do SIP, in 25 years, she could have made Rs.1.45 crore, an annual return of 11%, which is far higher than FDs.
Let us look at the table to know more:
|
Years |
Total amount invested through SIPs |
Value of investment |
|
10 |
Rs.12 lakh |
Rs.26 lakh |
|
15 |
Rs.18 lakh |
Rs.58 lakh |
|
20 |
Rs.24 lakh |
Rs.1.21 crore |
|
25 |
Rs.30 lakh |
Rs.3.71 crore |
The report comments, “Through regular investments, SIPs harness the power of compounding and reward investors with exponential growth. SIPs have been the prime investment vehicle in investor portfolios to fulfil basic financial needs such as buying their dream home, education for kinds and retirement among others. SIPs enable even the smallest of investment to blossom into mighty trees of financial abundance.”
