MONEY
Systematic Investment Plans (SIPs) in mutual funds are growing in popularity, with record-breaking participation from retail investors. According to the latest data, the number of SIP accounts surged to an all-time high of 10.22 crore in November 2024, up from 10.12 crore in October. The SIP AUM (Assets Under Management) also reached an impressive Rs 13.54 lakh crore, reflecting the growing interest of small investors in equity markets. Notably, monthly SIP contributions surpassed the Rs 25,000 crore mark for the second consecutive month, standing at Rs 25,320 crore in November 2024. This growing trend underlines how retail investors are increasingly leveraging SIPs to tap into the opportunities offered by India ’s robust equity markets. One of the standout features of mutual fund SIPs is their accessibility, with some funds allowing investments starting as low as Rs 20 a day. The impact of such small investments, when combined with the power of compounding, can be transformational over time. Also read: Mutual Fund SIP Calculator: Rs 100 daily investment can take you to Rs 2.61 crore corpus in 20 years – Check out this MF scheme Anupam Singhi, Chief Investment Officer at O’Neil Capital Management India and CEO at William O’Neil India, explains: The power of compounding can turn even the smallest contributions into significant wealth over time. A Rs 20-a-day SIP investment with 20% annual step up in an equity mutual fund can grow into Rs 34 lakh in 20 years, assuming an annualised return of 14%. To put it in perspective, this requires just Rs 7,300 in the first year and this can be increased by 20% every year. Calculations: First year investment: Rs 7,300 Annual step-up: 20% Annualised return: 14% (large-cap MFs have delivered 13-14% in the last 10 years) Total investment in 20 years: Rs 13.44 lakh Returns in 20 years: Rs 20.54 lakh Total corpus: Rs 33.98 lakh The Indian equity market has consistently proven its strength as a wealth-building avenue. Benchmarks like the NIFTY50 and the S&P BSE Sensex have delivered annualised returns of over 12% since inception, making them ideal for long-term wealth creation. Singhi highlights, “Large-cap mutual funds, closely aligned with these indices, have delivered returns of 13-14% annually over the past decade, making this target realistic for disciplined investors.” SIPs democratize wealth creation by enabling individuals from all income levels to participate. Even a seemingly insignificant amount like Rs 20 a day can accumulate into a substantial corpus over time, provided the investment remains untouched. “SIPs empower individuals from all income levels to participate in wealth creation. With as little as Rs 20 a day, one can accumulate a corpus capable of funding higher education, starting a business, or achieving partial financial independence. The key lies in consistency, patience, and resisting the urge to withdraw funds prematurely,” adds Singhi. Also read: Mutual Fund Calculator: Starting Rs 3000 SIP at 30? Here’s how much you will get at retirement India’s fast-paced economic growth, coupled with rising corporate earnings and GDP, provides a favorable environment for equity investments. SIPs allow small yet regular contributions to benefit from these macroeconomic trends. Singhi underscores this point: “The Rs 20-a-day strategy is not just about achieving numerical goals—it represents a mindset shift toward disciplined savings and financial planning, a vital step for India’s middle class in securing their futures.” To sum up, through this 20-20-20 formula for SIPs, one can achieve financial independence and wealth creation. With the equity market’s proven track record and the power of compounding, small investments can indeed turn into large financial milestones. Whether it’s planning for education, starting a business, or achieving other life goals, the Rs 20-a-day SIP strategy opens doors to endless possibilities. None
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