The Systematic Investment Plan (SIP) is a popular way to invest in mutual funds. You can start with as little as ₹100 per month. In this example, we will use an SIP calculator to find out how much your money will grow if you invest ₹8,000 every month for 10 years.
SIP Calculation
- Investment amount: ₹8,000 per month
- Return: 12%
If you invest ₹8,000 every month through SIP for 10 years at 12% return, you will get about ₹25.23 lakh at maturity. The total money you put in over 10 years will be ₹9 lakh.
How to Check Risk
Mutual funds are easy to invest in, but you must know the risks. Equity funds move with the stock market. Debt funds change with interest rates and credit quality. Small-cap and micro-cap funds also have high risk.
If a fund invests only in a few sectors, the risk is more because there is less diversification. Also, if your fund return is less than inflation, it is not useful.
Your own behaviour matters too. If you keep changing funds for short-term gain, your return may go down.
Farhad Gadawala, EVP and Head of Products at UTI AMC, says: Mutual fund return depends on the market. It is not fixed. So, it is better to stay invested for the long term.