1 Lakh SIP Per Month - Potential Value and Growth (2024)

Systematic Investment Plans (SIPs) have become one of the most popular ways investors use to invest in mutual funds. SIPs allow investors to invest a predetermined amount at a predetermined interval regularly in the choice of their mutual fund schemes. As the SIP amount is automatically debited every month from the investors’ bank accounts, the investors do not have to spend time and effort saving a specific amount every month and finding potential investments to invest in.

Because of their compounding feature, SIPs create financial discipline and may provide higher-than-normal returns. However, it is a common dilemma among mutual fund investors regarding the ideal amount to invest regularly in SIPs.

Although the amount you invest regularly in SIPs depends on various factors such as financial situation, risk appetite, and financial goals, it is a common principle that the higher the SIP amount, the higher the potential returns. This article will help you understand the return potential of Rs. 1 lakh SIP per month if you can invest Rs. 1 lakh in SIP.

Investing in SIPs is similar to buying a monthly subscription to your favourite OTT platform. You can visit the mutual fund house's website and fill out a SIP form, which contains details such as the SIP amount (Rs. 1 lakh here), SIP frequency (monthly, quarterly, semi-annually, or annually), and details about the mutual fund scheme. Mutual fund houses provide investors with the flexibility to choose any SIP amount they want to invest. If you want an Rs. 1 lakh SIP, you just have to fill out the amount in the SIP form, and the mutual fund house will deduct Rs. 1 lakh every month from your bank account.

Once you have set the SIP amount to Rs. 1 lakh, the mutual fund house will use the monthly amount of Rs. 1 lakh to buy mutual fund units. The mutual fund units you hold will rise or fall in value as per the performance of the securities included in the mutual fund scheme. Most SIPs have provided hefty returns to investors, with the return rate going over 15% or 18% in some mutual fund schemes. On average, mutual fund schemes have provided 10%-12% returns to the investors, which is at par or even higher than other investment instruments. However, it is important that you do extensive research on the mutual fund scheme before you do Rs. 1 lakh SIP per month.

Here is a detailed example to help you understand how much your SIP of Rs. 1 lakh per month will be worth after 5, 10, 15, and 20 years:

If you invest Rs. 1 lakh monthly in a SIP with an annual return rate of 12%, the investment can grow substantially over different time horizons.

Total contribution: Rs. 1,00,000 x 60 months = Rs. 60,00,000

Estimated value after 5 years: Rs. 82,48,637

Total contribution: Rs. 1,00,000 x 120 months = Rs. 1,20,00,000

Estimated value after 10 years: Rs. 2,32,33,908

Total contribution: Rs. 1,00,000 x 180 months = Rs. 1,80,00,000

Estimated value after 15 years: Rs. 5,04,57,600

Total contribution: Rs. 1,00,000 x 240 months = Rs. 2,40,00,000

Estimated value after 20 years: Rs. 9,99,14,792

Total contribution: Rs. 1,00,000 x 360 months = Rs. 3,60,00,000

Estimated value after 30 years: Rs. 35,29,91,377

Curious about how much your mutual fund investments can grow over time? Discover potential returns with our SIP return calculator and Lumpsum calculator. Estimate the future value of your investment now!

Here is a real-life example for a SIP of Rs. 1 lakh per month:

Let’s consider that you started a SIP of Rs. 1 lakh per month in a well-performing mutual fund such as the XYZ Equity Fund. What would happen if the investment is held for 5, 10, 15, 20, and 30 years with annual return rates of 12%, 15%, and 18%? Here is a real example with the final investment amount:

5-year SIP calculation:

Total contribution: Rs. 60,00,000
The final amount for a mutual fund with 12% returns: Rs. 82,48,637

The final amount for a mutual fund with 15% returns: Rs. 89,68,169

The final amount for a mutual fund with 18% returns: Rs. 97,65,787

10-year SIP calculation:

Total contribution: Rs. 1,20,00,000

The final amount for a mutual fund with 12% returns: Rs. 2,32,33,908

The final amount for a mutual fund with 15% returns: Rs. 2,78,65,727

The final amount for a mutual fund with 18% returns: Rs. 3,36,25,751

15-year SIP calculation:

Total contribution: Rs. 1,80,00,000

The final amount for a mutual fund with 12% returns: Rs. 5,48,00,000

The final amount for a mutual fund with 15% returns: Rs. 7,17,11,000

The final amount for a mutual fund with 18% returns: Rs. 9,30,08,000

20-year SIP calculation:

Total contribution: Rs. 2,40,00,000

The final amount for a mutual fund with 12% returns: Rs. 9,99,14,792

The final amount for a mutual fund with 15% returns: Rs. 15,15,95,497

The final amount for a mutual fund with 18% returns: Rs. 23,43,48,719

30-year SIP calculation:

Total contribution: Rs. 3,60,00,000

The final amount for a mutual fund with 12% returns: Rs. 35,29,91,377

The final amount for a mutual fund with 15% returns: Rs. 70,09,82,061

The final amount for a mutual fund with 18% returns: Rs. 1,43,25,28,917

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It is always good to create a balanced portfolio with well-diversified mutual fund investment through SIPs. However, most mutual fund portfolios are created based on the financial situation, SIP amount, risk appetite, investment goals, and the potential holding period of the investors.

Depending on these factors, here are some possible combinations of asset allocation to invest 1 lakh in SIP:

Combination 1: Rs. 30,000 in a large-cap fund, Rs. 20,000 in a balanced fund, Rs. 20,000 in a small and mid-cap fund, Rs. 20,000 in an index fund, and Rs. 10,000 in a flexi/multi-cap fund.

Combination 2: Rs. 40,000 in two large-cap funds (Rs. 20,000 each), Rs. 20,000 in a balanced fund, Rs. 20,000 in a small and mid-cap fund, and Rs. 20,000 in an index fund.

Combination 3: Rs. 30,000 in a balanced fund, Rs. 30,000 in two large-cap funds (Rs. 15,000 each), Rs. 20,000 in a small and mid-cap fund, and Rs. 20,000 in an index fund.

Combination 4: Rs. 50,000 in an index fund, Rs. 30,000 in a balanced fund, and Rs. 20,000 in two small and mid-cap funds (Rs. 10,000 each).

Combination 5: Rs. 30,000 in a large-cap fund, Rs. 20,000 in two small and mid-cap funds (Rs. 10,000 each), Rs. 30,000 in a balanced fund, and Rs. 20,000 in a flexi/multi-cap fund.