The Power of Compound: SIP of Rs 10,000 per month grows to Rs 215 crore in 20 years

The power of compounding in sip: While investors have been upset about recent market corrections and many have reportedly blocked their SIP or system investment plans, experts claim they are a natural phenomenon in the investment cycle. In fact, most of them praised it as the time to revisit their portfolio and increase their investment in the course for better returns.

How do mutual funds work to provide compound interest returns?

Typically, the corpus of mutual fund pool investors and their investments are made in asset classes, including stocks, bonds and other fixed asset classes. These asset classes are now reaped or rewarded in various ways, including dividends, interest, etc.

So now, like you earn income from your initial investment, you also make money from the reinvested corpus, creating a compound effect, and your wealth grows exponentially over time.

Again, since there is always a positive side in any way, you can think of the correction time of mutual fund investment as an era when you can get more units in mutual fund investment. So, at this time, you can see the bull runs with your unit compared to the value of your investment.

For example, if you invest Rs 1000, assuming the annual return is 10%, then in a year your investment will grow to Rs 1100. The second year, the 10% return is earned at Rs 1100, doubling your investment.

Compound effect in sip

SIP is primarily used for long-term purposes and targets specific financial goals, and it provides you with enhanced complex benefits as well as the average cost advantage of Rs. ultimately helping you achieve higher returns over time.

Nevertheless, with SIP and mutual fund investments, one cannot ignore the fact that these returns are market-connected and have their own risks and returns. In addition, there are expenses related to fund management, expense ratios and other related expenses that affect the benefits of complex returns to a certain extent.

So to make sure your investment is aligned with future financial goals – you must stick to long-term financial goals and review any changes required for your portfolio time and time again.

As of April 19, 2025

Note that the investment in these funds through the SIP route began on April 1, 2005 and is now worth more than Rs 2 crore.

And if investors have accepted annual SIP strengthening for this investment, their wealth will increase further.

Disclaimer: This is not an investment advice for investing in these funds. Always check your risky appetite and future financial goals to address investments accordingly.