SYSTEMATIC INVESTMENT PLAN SIP

Welcome to Infinity Wealth Creation

Page Title

Home / SYSTEMATIC INVESTMENT PLAN SIP

"Little drops of water make the mighty ocean"

Systematic Investment Plan (SIP) is nothing but small amount of money invested on a pre-set date every month into specific mutual fund/funds. One of the best ways of entering equitymarket is through Systematic Investment Plans (SIPs) in equity mutual funds, as it brings in an investment discipline for the investor. SIPs help to achieve financial goals by investing small sums of money on a monthly basis that eventually leads to accumulating the required corpus for reaching thegoal.

Ideally, to reap the benefits of SIPs, the investment horizon should be for longer term. Longer the investment horizon, better the wealth accumulation.

Benefits of SIP

(At an assumed rate of 12% p.a)

Amer Akbar Antony
Number of years 10 20 30
No. of Months Invested 120 240 360
Monthly Investment Amount -15000 -7500 -5000
Mutual Fund Return (Assumed) 12% 12% 12%
Monthly Returns 0.95% 0.95% 0.95%
Total Amount Invested -1800000 -1800000 -1800000
Estimated Redemption Amount 3,360,538 6,898,930 15,404,866

When we look at the corpus accumulated at the end of the tenor, the wealth accumulation is at its best in the long run. As the time given to investment increases, the wealth builds at an accelerated pace because of compounding effect. As per the illustration given above, the difference between the RD and the Equity Mutual fund SIP, could be more than double in the long run.