Mutual funds have become backbone of Indian investing. Especially SIPs. Systematic Investment Plans changed how retail investors put money in market. No need to time market. Just invest small every month and let compounding work. But question always comes. How much return do SIPs really give in long run. Let’s check last 10 years story.
What Is SIP in Simple Words
SIP is like monthly savings but instead of bank you invest in mutual funds. Money gets deducted every month automatically. You buy units at different prices. Over time average cost comes down. That is called rupee cost averaging.
Biggest advantage is discipline. Most people cannot invest lump sum at right time. But SIP makes it automatic.
Why Look at 10 Years Data
Short term SIP may not show real power. Market goes up and down. But over 10 years pattern becomes clear. You see how compounding and averaging work. Past decade also included multiple events – demonetization, covid crash, Russia-Ukraine war, inflation shock. Despite all, SIP investors got decent returns.
Equity Mutual Funds Performance
Equity SIPs delivered best returns over 10 years. On average large cap funds gave around 12 to 14 percent annualized. Midcap funds gave even higher about 14 to 16 percent. Smallcap funds more volatile but some gave 18 percent plus.
Example – If you invested ₹10,000 every month in Nifty 50 index fund for 10 years total investment ₹12 lakh. Value today around ₹23 to 25 lakh depending on scheme. That’s nearly double.
In midcap SIP same amount grew to around ₹28 to 30 lakh. Risk higher but reward also higher.
Debt and Hybrid Funds
Not everyone wants high risk. Debt mutual funds are safer. Their SIP returns were lower. Around 6 to 8 percent annualized. Hybrid funds (mix of equity + debt) gave around 9 to 11 percent. So balance risk reward.
Debt SIPs are good for short term goals like child’s education fee in few years. Equity SIPs are better for long term like retirement.
Power of Compounding
Numbers speak. Someone who started SIP in 2015 and continued till 2025 made serious wealth. Just ₹5,000 per month in good equity fund grew to ₹15 to 17 lakh. That’s power of compounding. Money grows not linearly but exponentially.
This is why experts keep saying start early and stay invested.
Impact of Market Crashes
Many investors fear market crash. But SIP investors actually benefit. During Covid 2020 market fell 35 percent. SIP kept buying units cheap. When recovery came value shot up. Same happened in 2013 taper tantrum and 2018 NBFC crisis.
So dips are not enemy for SIP. They are opportunity.
Taxes and Costs
SIP returns also depend on tax. Equity mutual funds taxed 10 percent on long term capital gains above ₹1 lakh. Short term gains taxed 15 percent. Debt funds rules changed in 2023 no indexation benefit. So net return little less after tax.
Expense ratio of fund also matters. Direct plans cheaper. Regular plans costly. Over 10 years difference is big.
What 10 Year Data Teaches Us
- Equity SIP beats inflation comfortably
- Longer you stay higher the CAGR return
- Midcap and smallcap gave highest return but with high risk
- Diversification is key don’t put all money in one category
- Timing doesn’t matter much discipline matters more
SIP vs Other Options
Compare with FD. In 10 years FD gave 6 to 7 percent. ₹10,000 monthly FD became around ₹16 lakh. Same in equity SIP became ₹23 to 28 lakh. Big gap. Gold gave around 7 to 8 percent average. Again less than equity SIP.
So mutual fund SIP outperformed traditional savings.
Investor Psychology
But many investors stopped SIP midway. They panicked during crash. That reduced returns. Those who stayed invested saw magic. So patience is key. SIP is not 1 year lottery. It’s 10 15 20 year game.
Future Outlook
Looking ahead experts still bullish. India economy growing fast. Digital push manufacturing boom young population. Equities expected to deliver 12 to 15 percent long term. SIP remains best tool for retail.
Debt funds will remain moderate. Hybrid funds good for conservative investors.
Example Table
| Category | 10 Year SIP CAGR | Value of ₹10k/month SIP | Risk Level |
|---|---|---|---|
| Large Cap Equity | 12-14% | ₹23-25 lakh | Moderate |
| Mid Cap Equity | 14-16% | ₹28-30 lakh | High |
| Small Cap Equity | 16-18% | ₹32+ lakh | Very High |
| Debt Funds | 6-8% | ₹15-16 lakh | Low |
| Hybrid Funds | 9-11% | ₹20-22 lakh | Balanced |
Final Words
Mutual fund SIP over past 10 years proved reliable wealth creator. Equity SIP doubled investor money despite all market crashes. Debt SIP gave stable but lower return. Hybrid SIP gave balanced growth.
So what should investor do. Continue SIP. Increase amount when income rises. Choose right funds according to risk profile. And most important don’t stop during downturns.
In long run SIP is simple yet powerful. It teaches discipline patience and builds wealth silently. Ten years later you will thank yourself for starting today.
