Sip calculator: If you want to invest in the stock market, but want to avoid taking risks with a large amount, mutual funds can be the best option for you. Systematic Investment Plan (SIP) is the way through mutual funds that can make a big fund by investing small amounts. Its real advantage is seen when the effect of compounding is connected over time.
However, the real strength of profits in the market comes from compounding ie compounding. Financial experts believe that long -term investment in the stock market improves returns. As the famous scientist Albert Einstein said, ‘Cyamician interest is the eighth wonder in the world. He who understands it, he earns… and who does not understand, he suffers loss of it. ‘
How much fund will be made from SIP of ₹ 5,000?
If you do SIP of ₹ 5,000 every month and consider an average of 12% annual return, then how this investment increases can be understood in detail in the table below.
| Investment period | total investment | Estimated value @12% returns | total profit |
| 5 years | ₹ 3 lakh | ₹ 4.06 Lakh | ₹ 1.06 Lakh |
| 10 years | ₹ 6 lakhs | ₹ 11.61 Lakh | ₹ 5.61 Lakh |
| 15 years | ₹ 9 lakhs | ₹ 22.93 Lakh | ₹ 13.93 Lakh |
How does compound interest work?
Complinging ie compound interest means that the Return is added next month on the amount of every month in the SIP, and then the next time on that return also gets the next time, the same is compounding. This is the reason that the benefit of 15 years of SIP is many times more than 5 or 10 years, which shows the real strength of compounding.
What is big learning for investors?
- The sooner you start investing, the more compounding you will get the benefit.
- The strength of SIP is visible only when you continue investing in the falling market.
- SIP is not a short term scheme. Time and Dhayars are the greatest friends in this.
- 12% returns are just average estimates. The real return will depend on the performance of the fund and the move of the market.
Also read: Money Mistakes: People of 20 to 30 years often do these 10 money mistakes, are you not doing anywhere?
Disclaimer: Here information provided is being given only for information. It is necessary to mention here that the investment market in the market is subject to risks. Always consult experts before investing money as an investor. There is never advice to anyone to invest money on behalf of Moneycontrol.