“Small Drops Make an Ocean.” The popular proverb looks good for motivation than anywhere close to be a reality to most people. Let me share an open secret with you – equity markets have power to prove this proverb not only to be true but a powerful tool to create wealth. Yes, by investing small amounts (drops of your savings) regularly in stock markets through SIPs in mutual funds, you can make an ocean of wealth. The only condition is that you need to be patient & regular.
We analysed SIP performance of all the mutual fund schemes that were available for a period of 15 years, 20 years and 25 years. Let us know what the results are. We have considered only regular plans and actively managed funds for the analysis. We have not considered any ETF, FOF, sectoral or thematic funds. We have considered investing Rs. 1,000/- per month in each individual scheme to calculate the real values. And we have sourced this data from www.advisorkhoj.com
15 Years SIP Returns – of the 95 actively managed schemes for this duration across market caps & industries, 79 schemes generated 12% or more returns and only 3 schemes gave returns below 10%. Average return of the 93 schemes was 14.14%. Value of Rs. 1,80,000/- invested over 15 years was Rs. 9,17,786/- in the scheme giving highest return of 19.7% and Rs. 3,65,634/- in the scheme giving lowest returns of 8.96% in the same period.
|
Total Schemes |
95 |
|
|
Amount Invested |
180,000 |
|
|
Average Value/Return |
578,024 |
14.14% |
|
Highest Value/Return |
917,786 |
19.70% |
|
Lowest Value/Return |
365,634 |
8.96% |
20 Years SIP Returns – of the 32 actively managed schemes for this duration across market caps & industries, 28 schemes generated 12% or more returns and with only one scheme giving single digit return. Average return of the 32 schemes was 15.35%. Value of Rs. 2,40,000/- invested over 20 years was Rs. 24,86,302/- in the scheme giving highest return of 20.14% and Rs. 6,94,335/- in the scheme giving lowest returns of 9.71% in the same period.
|
Total Schemes |
32 |
|
|
Amount Invested |
240,000 |
|
|
Average Returns |
1,446,999 |
15.35% |
|
Highest Value/Return |
2,486,302 |
20.14% |
|
Lowest Value/Return |
694,335 |
9.71% |
25 Years SIP Returns – Similarly of the 23 actively managed schemes for this duration across market caps & industries, 19 schemes generated 12% or more returns and all schemes giving returns above 10%. Average return of the 23 schemes was 15.7%. Value of Rs. 3,00,000/- invested over 25 years was astonishing Rs. 93,06,581/- in the scheme giving highest return of 22.49% and Rs. 12,39,842/- in the scheme giving lowest returns of 10.03% in the same period.
|
Total Schemes |
23 |
|
|
Amount Invested |
300,000 |
|
|
Average Returns |
3,634,984 |
15.70% |
|
Highest Value/Return |
9,306,581 |
22.49% |
|
Lowest Value/Return |
1,239,842 |
10.03% |
It requires lot of guts and patience to keep investing for that long period. And these long periods include many such period when markets dropped by over 20% from their values at that point of time. Markets have seen many scams, dot com bubble, subprime crisis, global lockdown due to corona etc. and still flourished because economies despite hiccups enroute, kept marching ahead.
Three most important points that emerge from above analysis are:
1. 1. Over long period SIP investments not only gives you positive returns but even the worst scheme has given more returns than a bank deposit for that long tenure.
2. 2. For different timeframe, different scheme of different category has done better than others.
3. 3. Difference between schemes giving highest and lowest return is large enough.
In view of above we can easily conclude that SIPs are an amazing tool for wealth creation for both small as well as HNI investors. Not only you should start your SIPs but also encourage people around you to start an SIP in equity mutual fund to have decent corpus at the time of retirement. Such people could be your maid, gardner, driver, peon in office, small vendors etc. One can start an SIP with as low as Rs.100/- per month.
It becomes pertinent to note that even for SIPs one must invest in portfolio of schemes to earn higher returns than the average if not the highest. And please take care of asset allocation decided based on your goal planning.
So what are you waiting for, pick up your phone and ask your InvestmentMitra to facilitate your SIP portfolio investment. Alternatively you may write to info@investmentmitra.com or whatsapp/SMS on 9958447700.
Happy Investing!
Team InvestmentMitra