SIP calculation: Systematic Investment Plan (SIP) is one of the simplest and most disciplined ways to invest in mutual funds. It allows people to start with a small amount while building long-term wealth. Today, investors can even begin with ₹100, which makes SIP accessible for everyone—students, professionals, and beginners.
To understand SIP better, let’s look at what happens when someone invests ₹10,000 every month for 10 years.
SIP Calculation for ₹10,000 per Month
- Monthly Investment: ₹10,000
- Total Duration: 10 years (120 months)
- Assumed Annual Return: 12%
If you follow this SIP for 10 years, the total maturity value becomes approximately ₹23,23,000.
Total Amount You Invest
₹10,000 × 120 months = ₹12,00,000
Total Wealth Created
Maturity Value – Total Investment
₹23,23,000 – ₹12,00,000 = ₹11,23,000 profit
So, your money grows almost double because of compounding. This is the real power of SIP—steady investment + time = big wealth.
Should You Stop SIP During Market Crash ?
Many new investors get scared when the stock market falls and immediately stop their SIP. But this is the wrong move. Market dips are actually the best time for SIP investors because:
- You buy more mutual fund units at a cheaper rate
- Your average cost goes down
- When the market rises, your returns grow faster
Market volatility is normal. SIP works on the idea of rupee cost averaging, which reduces risk when the market goes down. Therefore, stopping SIP during a crash can hurt long-term returns.
Never Pause SIP Without a Strong Reason
Life situations like job loss, marriage, medical needs, or big purchases may affect your finances. But if possible, continue your SIP. Even small breaks can reduce compounding benefits.
If money is tight, reduce the SIP amount instead of stopping altogether. Consistency is the key to long-term wealth creation.
Disclaimer
This article is for information only and is not investment advice. Mutual funds involve market risks. Always consult a qualified financial advisor before making investment decisions.