Albert Einstein famously called compound interest the "eighth wonder of the world." Systematic Investment Plans (SIPs) are the best way for average investors to harness this power. By investing small amounts regularly, you can build significant wealth over 10, 15, or 20 years.
What is Rupee Cost Averaging?
One of the biggest advantages of SIPs is Rupee Cost Averaging. You don't need to time the market. When the market is down, your fixed monthly amount buys more units. When the market is up, it buys fewer. Over time, this averages out your cost of acquisition and protects you from volatility.
The 15-15-15 Rule
A popular rule of thumb in mutual fund investing is:
- Invest 15,000 per month.
- For 15 years.
- At an expected return of 15% (common for mid/small-cap funds).
The result? You could accumulate a corpus of roughly 1 Crore. If you delay starting by just 5 years, that corpus drops by nearly half!
Calculate Your Future Wealth
Input your monthly investment and see how much you could earn.
Start SIP CalculationStep-Up SIPs: Fighting Inflation
As your income grows, your investment should too. A "Step-Up SIP" involves increasing your monthly contribution by 10% every year. This small change can double your final corpus compared to a flat SIP over a long tenure.
Common SIP Mistakes
- Stopping during market dips: This is exactly when you should continue to buy more units at lower prices.
- Setting unrealistic expectations: Equity markets are volatile. While 12-15% is possible long-term, short-term returns can be negative.
- Not reviewing your portfolio: Once a year, check if your funds are performing against their benchmark.