A Systematic Investment Plan (SIP) is a popular method of creating wealth slowly but steadily. A SIP requires you to invest a small chunk of money monthly, quarterly, or annually.
That’s how SIPs can grow into a large sum of money over time. More often than not, the term SIP is used in the context of mutual funds even though there’s the option of starting a SIP in stocks.
In this blog, we’ll stick to SIP mutual funds to help you understand the benefits and whether or not you can become rich in India by investing in top SIP mutual funds.
Why Invest Through SIPs?
Broadly speaking, there are 3 reasons why investors could benefit from starting a SIP, apart from the fact that it can fetch you solid returns and set up a source of passive income.
1. Rupee Cost Averaging
A SIP in a mutual fund allows you to invest across market cycles. This basically means that you’ll invest the same amount of money when the market goes up or down. Because of consistency, you’ll get:
- More units when the market is going down
- Fewer units when the market is going up
The result would be an averaged number of mutual fund units. This is known as rupee cost averaging and it allows you to stay away from the hassle of timing the market.
2. Low Minimum Investment Amount
There are several AMCs and apps like Cube that allow you to start a SIP in top mutual funds for as low as ₹500. There are bonus features like SuperSIP on Cube that allows you to increase your SIP amount.
3. Convenience
SIPs are one of the most convenient ways to invest in mutual funds because they negate the need for timing the market. Moreover, if you’re starting a SIP using an app like Cube, you can access:
- Mutual fund advice from experts who have a track record of beating Nifty by ~50% over the past decade
- Portfolio planning and analysis from trained professionals who’ve been in the finance industry for more than a decade
How Can SIPs Make You Rich?
Remember the small chunk of money that we spoke about in the introduction? It can compound into a relatively large sum of profits over the long run with the right SIP mutual fund investment.
There’s a term for this called “the power of compounding” where it’s not just your principal amount that’s earning returns, even your returns earn returns on top of them.
For example, a ₹50,000 monthly SIP in a debt mutual that gives 8% returns across 5 years can grow up to ₹3,702,316. You can test the power of compounding with the help of Cube’s SIP wealth calculator.
Why Use A SIP Calculator To Check Returns?
Cube’s SIP wealth calculator can help you visualize the returns you can earn by starting a SIP. It’s simple and easy to use but above all, it can give you clarity on the expected consistency and rewards.
Here’s how you can use Cube’s SIP calculator:
1. Enter the amount you want to invest
2. Select a suitable time frame
3. Slide across various returns percentages
4. Find out how much you can earn with SIPs
Test out Cube’s SIP wealth calculator yourself here:
Earning Through SIP Mutual Funds
We’ve established that your SIP mutual fund investment grows with the power of compounding. But this has wider implications. To start with, you can earn a passive income from your SIP mutual funds.
Investors have been known to build a portfolio of SIP mutual funds and use the passive income and returns for different goals across the short, medium, and long term.
An all-weather portfolio like this is what we like to call the “Perfect Portfolio” at Cube. Building the Perfect Portfolio on your own can be challenging because of the amount of research involved.
But Cube simplifies this for you with the bucket philosophy and by giving you access to top-notch wealth advisors. You can read more about it here: How to Build the Perfect Investment Portfolio
Most Profitable SIP Mutual Funds In India
Cube’s mutual fund advisor Wealth First handpicks and curates top-performing mutual funds in India for Cube users. Here’s a sneak peek into some of the best SIPs that can help you become rich in India.
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SIP Mutual Fund
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3-Year Returns
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5-Year Returns
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Nippon India Liquid Fund
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5.30%
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5.95%
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ICICI Prudential Corporate Bond Fund
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8.48%
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7.78%
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Axis Focused 25 Fund
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13.46%
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16.82%
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Franklin India Feeder - Franklin U.S. Opportunities Fund
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25.21%
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23.35%
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Mirae Asset Tax Saver Fund
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19.41%
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20.39%
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Note: All facts & figures are correct as of 07-08-2021. While we update our blogs regularly, download the Cube Wealth app to get the latest facts and figures.
FAQs
1. How can I earn from SIP?
A Systematic Investment Plan (SIP) in a mutual fund allows you to create wealth with the power of compounding. Your principal and returns will both earn returns and as a result, you’ll earn a passive income.
2. Can SIP make you rich?
Investing consistently in the right mutual funds using a SIP can help you grow your wealth over time. However, it’s important to note that it takes a lot of research to narrow down the best mutual funds in India. Apps like Cube do this for you with the help of experts like Wealth First.
3. Is it worth investing in SIP?
SIPs have the potential to generate lucrative returns over time. Furthermore, they can help you set up a corpus of passive income generating mutual funds. But the trick is to choose the right mutual funds that can perform well over the next 5+ years, only then will your SIPs be worth it.
