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SIP Scheme of A Mutual Fund

SIP (Systematic Investment Plan) allows investors to invest a fixed amount in a mutual fund scheme at regular intervals, such as monthly or quarterly, instead of lump sum investments. The document provides two examples to illustrate how investing through SIP over longer periods of time, such as 5 or 15 years, can generate higher returns compared to a one-time investment. In the first example, a Rs. 3 lakh investment over 5 years at 7% annual return grows to Rs. 3.6 lakh. In the second example, Rs. 63 lakh invested over 15 years at the same 7% return grows to Rs. 1.11 crore.

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38 views1 page

SIP Scheme of A Mutual Fund

SIP (Systematic Investment Plan) allows investors to invest a fixed amount in a mutual fund scheme at regular intervals, such as monthly or quarterly, instead of lump sum investments. The document provides two examples to illustrate how investing through SIP over longer periods of time, such as 5 or 15 years, can generate higher returns compared to a one-time investment. In the first example, a Rs. 3 lakh investment over 5 years at 7% annual return grows to Rs. 3.6 lakh. In the second example, Rs. 63 lakh invested over 15 years at the same 7% return grows to Rs. 1.11 crore.

Uploaded by

ARAV
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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SIP scheme of a Mutual Fund

SIP (Systematic Investment Plan): -


SIP is an investment route offered by mutual funds where in one can invest a fix amount in a mutual fund
scheme at regular interval say once a month or once a quarter instead of making a lump-sum investment.
SIP Return: -
M=P x [{(1+i)n -1}/i] x (1+i)
M= Amount you receive upon maturity
P= Amount you invest at regular intervals
N= The number of payments you have made
I= Periodic rate of interest.
Let’s take a situation-
Suppose you invest Rs 5000 in an SIP Scheme (which varies from 500 to 1 lakhs Rs)
And you invest that money for 5 years on a monthly basis (which varies from 1year to 100 years)
So, the Frequency of investments are= 60
And the Total Investment Amount is= 3 lakhs
Now suppose the expected return from that SIP scheme is= 7% Then, after 5 years
this amount of 3,00,000 becomes = 3,60,053
Let’s take another example-
Suppose you invest Rs 35,000 in the same scheme (As mentioned above)
And now you invest that money for 15 years on a monthly basis
So, the Frequency of investments are = 180
And the Total Investment Amount is = 63,00,000
now the expected return from that SIP is same which is = 7%
then. After 15 years this amount of 63,00,000 becomes = 1,11,58,394
(According to Calculator provided by the scheme itself)

Hence, if one wants to enjoy a high return, he should invest their money for a long time.

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