A Systematic Investment Plan (SIP) makes investing easy and accessible, even with small amounts. It allows you to regularly invest a fixed sum in mutual funds. The magic behind long-term wealth creation through SIPs is the power of compounding. Let's explore how a consistent ₹18,000 monthly SIP can help you build substantial wealth over different timeframes.
Compounding is like a snowball rolling downhill – it gets bigger and faster. In investing, it means your earnings also start earning returns. You get returns not just on your original investment, but also on the profits you've already made. To get the most out of compounding, it's best to start investing early and regularly.
A SIP is a simple way to invest a fixed amount regularly into mutual funds. You can choose to invest daily, weekly, monthly, quarterly, or yearly. You can even start with as little as ₹100. Setting up a SIP is straightforward: you instruct a mutual fund company to automatically deduct a set amount from your bank account at chosen intervals.
SIPs offer several advantages for investors. They help you build wealth steadily over the long term, thanks to compounding and the discipline of regular investing. SIPs also make investing less stressful, as you don't need to worry about timing the market perfectly.
The earlier you start investing, the more time your money has to grow through compounding. This can lead to significantly higher returns in the long run.
For our calculations, we're looking at a monthly investment of ₹18,000 with an expected annual return of 13%.
If you invest ₹18,000 every month for 10 years:
If you continue your ₹18,000 monthly SIP for 20 years:
Extending your ₹18,000 monthly SIP to 30 years shows the true power of compounding:
Read more: 30-Year vs 25-Year Loan: What ₹2,863 Extra EMI Can Do for You
As you can see, a consistent ₹18,000 monthly SIP, with an expected 13% annual return, can lead to substantial wealth creation over time. While the early years show steady growth, the later years truly demonstrate the exponential power of compounding. Investing in SIPs allows you to systematically build your financial future, proving that even a fixed regular investment can lead to significant financial milestones. Remember to align your investments with your risk tolerance and financial goals.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.
Published on: Jun 25, 2025, 1:19 PM IST
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