How a SIP builds wealth
A Systematic Investment Plan (SIP) invests a fixed amount in a mutual fund every month. Two forces do the heavy lifting: rupee-cost averaging, where your fixed sum buys more units when prices dip and fewer when they rise, and compounding, where returns themselves start earning returns. The longer you stay invested, the more dramatic the compounding effect becomes.
Why the expected return is just an assumption
The figure you enter is an assumed average annual return, not a promise. Equity funds have historically returned around 10–14% over long horizons, but any single year can be far higher or lower. Use a realistic, conservative rate and treat the result as a ballpark, not a guarantee.
Tips for SIP investors
- Start early — even a small monthly amount grows large over decades.
- Increase your SIP amount as your income rises (a step-up SIP).
- Stay invested through market dips; that's when averaging works best.