Even if a person does not invest in the stock market, they have likely been advised to start making SIPs (Systematic Investment Plans). The question arises: how much money will be accumulated after 3, 5, or 10 years? However, it should be noted that the higher the declared return of a fund, the more difficult it is to achieve in practice, especially during market downturns.
In the last two years, the market has not shown significant returns, causing the income of investors who put money into mutual funds not to increase as much as they expected.
This article presents a calculation of the amount that a SIP of 5000 rupees can yield over five years, depending on different return levels.
For large-cap funds, the expected return is estimated to be within 10–12 percent. Although the return can sometimes exceed these figures, the average return over five years is usually considered to be 10–12 percent. Assuming a return of 10 percent, a SIP of 5000 rupees over five years will amount to ₹3,85,859, and at a return of 12 percent—₹4,05,518.
In such funds, a return range of 12–15 percent is often forecasted. If a fund provides an average of 15 percent annually over five years, the total amount after five years will reach ₹4,36,710, of which the interest income will be ₹1,36,710.
In small-cap funds, investors can expect a projected return of 20 to 25 percent. If a fund yields 20 percent annually, a SIP of 5000 rupees over five years will bring ₹4,93,520. At a return of 25 percent, the total amount will be ₹5,56,833.
Each fund type has its advantages and disadvantages. Choosing a large-cap fund implies lower risk in the stock market, and in case of a fund decline, the chances of quick recovery are higher. Mid-cap funds carry slightly more risk, while the highest risk is observed in small-cap funds, where some funds may show very low or negative returns for two consecutive years.
For this reason, experts often advise diversifying portfolios and recommending long-term investment. (Note: Always consult your financial advisor before investing in any stock or fund.)