The Magic of SIP – Small, Disciplined Savings count BIG in wealth creation.

SIP (Systematic Installment Plan) is a tool that allows investors to make regular, equal investments in mutual fund schemes every month or every quarter to help in wealth creation.

  • Are you willing to invest long-term?
  • Do you find timing the market a headache?
  • Do you think investing a lump sum amount every time maybe a burden?
  • Do you want to make your money work as hard as you?

If yes, then SIP is the answer!

Advantages of SIP:

  • Power of Compounding
    “Compound interest is the eighth wonder of the world. He who understands it, earns it… he who doesn’t… pays it.” – AlbertEinstein.
    To avail the benefit of power of compounding one has to start early and invest regularly. At an early stage, a less investment is needed and your money gets more time to grow whereas more investment is needed at a later stage to accumulate the same planned corpus.
  • Rupee Cost Averaging:
    It means averaging the cost price of your investments.
    SIP helps in averaging the cost as equal amount is invested regularly every month at different NAVs. When markets are down you get more number of units and when the markets are up you get less number of units. Hence, over all the prices gets averaged out.


The table below depicts the cumulative amounts that 3 investors accrue upon retirement when they save & invest Rs. 5000 per month starting at different ages in their life. The amount per month invested is identical for the 3 investors, the only difference between them is their investment period.

Returns (Assumed CAGR)

Name Start Age Retirement No. of years invested Amount invested per month Total amout invested(Rs.) 12%p.a. 15%p.a. 18%p.a.
X 25 60 35 Rs. 5000 21,00,000.00 3,24,76,345 7,43,03,225 17,54,87,438.00
Y 30 60 30 Rs. 5000 18,00,000.00 1,76,49,569 3,50,49,103 7,16,26,446.00
Z 35 60 25 Rs. 5000 15,00,000.00 94,88,175 1,64,20,368 2,91,16,560.00
  • Investor X started at age 25. His corpus at age 60 @15% p.a. is Rs. 7.43 crores approx.
  • Investor Y started at age 30. His corpus at age 60 @15% p.a. is lower at Rs. 3.5 crores approx.
  • Investor Z started at age 35. His corpus at age 60 @15% p.a. is much lower at Rs. 1.64 crores approx.

5 Basic points to keep in mind:

  • Start Now: You can see the cost of delay, in a mere 5 years between X and Y.
  • Invest long-term: Power of compounding is the 8th wonder of the world (Einstein)-The longer you invest, the more you accumulate. X invested the longest time, resulting in the biggest corpus.
  • Invest regularly and remain invested: Discipline is key when it comes to saving. All 3 invested Rs. 5000 every month.
  • Don’t be affected by market vagaries: SIP’s will help average out the cost of your investments. (Rupee Cost Averaging)
  • Easy on the pocket: You don’t need a lumpsum -a small amount every month counts a long way.