A Decade of Investing: Analysing Average SIP Returns in 10 Years

A Decade of Investing: Analysing Average SIP Returns in 10 Years


In the last few years, many retail investors have started investing regularly in mutual funds through the systematic investment plan (SIP) route. Also, the stock markets have done well in the last few years. During the Covid pandemic, the Nifty 50 Index fell to levels of around 7,500.

Since then, it has more than trebled to levels above 22,500. Retail investors who have kept faith and continued investing have been rewarded handsomely. In this article, we will look at how the SIP culture has been building among retail investors and the returns SIPs have generated over the last decade.

Boom in SIP Accounts and Inflows

As per AMFI data, the number of new SIPs registered and the total number of SIP outstanding accounts has seen a good rise in the last three years.

Financial Year

New SIPs Registered (lakhs)

Total Outstanding SIP Accounts (lakhs)

SIP Contribution (Rs. crores)

Total SIP AUM (Rs. crores)

Apr 21 – Mar 22

266.36

527.73

1,24,566

5,76,358

Apr 22 – Mar 23

251.41

635.99

1,55,972

6,83,296

Apr 23 – Mar 24

428.09

839.71

1,99,219

10,71,666

Apr 24 – May 24

(2 months)

113.39

875.89

41,275

11,52,801

 

The above table shows how the number of total outstanding SIP accounts has increased rapidly from 527 lakhs to 875 lakhs in the last three years. Also, the total SIP assets under management (AUM) have doubled from Rs. 5.76 lakh crores to Rs. 11.52 lakh crores.

Now, let us look at how the monthly SIP inflows have fared in the last one year.

Month

SIP Inflows (Rs. crores)

June 2023

14,734

July 2023

15,245

August 2023

15,814

September 2023

16,042

October 2023

16,928

November 2023

17,073

December 2023

17,610

January 2024

18,838

February 2024

19,187

March 2024

19,271

April 2024

20,371

May 2024

20,904

 

As seen in the above table, the May 2024 SIP inflows of Rs. 20,904 crores are the highest ever we have seen in any month. Also, the above table shows how we have seen the highest-ever monthly SIP inflows in every single month in the last one year.

SIP Returns Over the Decade

In the earlier section, we saw how the SIP contributions from retail investors have been growing by leaps and bounds in the last few years. Amidst the growth in SIP contributions, let us look at how have been the SIP returns.

Let us take an example of an active large-cap fund and a Nifty 50 Index fund and see how the SIP returns have been.

Large Cap Fund – SIP returns

Investment Tenure

1 Year

3 Years

5 Years

7 Years

10 Years

Total Amount Invested (Rs.)

1,20,000

3,60,000

6,00,000

8,40,000

12,00,000

Market Value (Rs.)

1,33,857

4,44,730

9,03,640

14,12,188

25,26,794

Returns (XIRR)

22.17%

14.42%

16.41%

14.59%

14.25%

 

Note: The above data is for a Large Cap Fund – Regular Plan – Growth option. The returns are as of 30th April 2024 for a monthly SIP of Rs. 10,000 invested on the 1st working day of every month.

The above table shows how the Rs. 10,000 monthly SIP investment, over a period of ten years, generated an XIRR return of 14.25%. It is a decent return. It more than doubled the total investment of Rs. 12 lakhs to Rs. 25.26 lakhs.

Similarly, if we look at the data for mid and small-cap active funds, some have delivered better returns than large-cap active funds. While mid and small caps may have lower liquidity and higher volatility, they have the potential to deliver higher returns than large caps.

SIP Investing for Goals

You should consult a qualified and experienced investment advisor for your financial planning. They can help you classify your financial goals into short, medium, and long-term goals and make a goal plan for each to achieve them. For long-term financial goals like retirement planning, where the investment time horizon is more than five years, you should invest in equity mutual funds through the SIP route.

A monthly SIP or Systematic Transfer Plan (STP) will help you make staggered investments in an equity fund. In the long run, the market will go through up and down economic cycles. For example, during the decade 2014-24, the market saw adverse phases like demonetisation, sell-off in mid and small caps, the Covid pandemic, the Ukraine-Russia war, the Israel-Hamas war, Union Election results, etc. During these phases, the market corrected where the degree of the correction ranged from 5 to 50%. However, after every correction, the market turned around, recouped the losses, and went on to make new all-time highs.

When the markets are going down, the SIP will provide you with the Rupee Cost Averaging (RCA) benefit. You will accumulate more units of the scheme with a lower Net Asset Value (NAV). When the correction phase gets over, the market will resume its upward trend. The value of the units accumulated at a lower NAV earlier will go up, and benefit your overall portfolio.

SIPs can make you a disciplined investor, help you ride sail through the period of market volatility, and create wealth for you in the long run. SIPs can help you achieve your financial goals and attain financial freedom.

Average SIP Returns in 10 Years SIP Average Return in India What Is the Average Return on SIP

Your Investing Experts

Relevant Articles

...

How to Use SIPs to Create Long-Term Wealth

The financial planning journey to create wealth, and fulfil financial goals is a marathon, not a sprint. In this marathon, investing regularly in a disciplined manner through the systematic investment plan (SIP) route is the key to creating long-term wealth. In this article, we will understand how a consistent and disciplined long-term SIP investment can provide you with the benefits of compounding and create wealth.

...

Step-By-Step Guide to Starting a SIP: Everything You Need to Know

Most of us earn a regular monthly income and hence prefer to invest a regular monthly amount towards our financial goals. Also, it will be great if the monthly investment process is automated after a onetime setup. A Systematic Investment Plan or SIP allows you to do that. In this article, we will understand what is an SIP, how to invest in SIP, and where to invest in SIP.

...

SIP Vs Lumpsum Investments: Which Is Better?

Investing towards financial goals can be done in two ways. The first option is to invest a part of the income every month for the long term. The other option is to invest a lumpsum amount once and stay invested for the long term. Both options have pros and cons, and investors often wonder which option they should choose. In this article, we will discuss SIP vs Lump sum, and which approach an investor should take.