SIP Returns: Growth Over 10-20 Years Explained

• SIPs invest fixed amounts regularly in mutual funds, averaging costs.
• Compounding boosts SIP returns over 10-20 years significantly.
• Start SIPs early with steady cash flow, time in market is key.

What is an SIP? A systematic investment plan (SIP) is a disciplined way of investing a fixed amount of money at regular intervals, typically monthly, into a mutual fund. It allows investors to participate in the market gradually rather than investing a lump sum at one time. It has also emerged as a popular choice among beginner investors to build wealth over extended periods of a decade or two and more. (Image: Canva) 

How does an SIP grow? The power of compounding is real when it comes to SIP. Each monthly investment buys mutual fund units at prevailing prices (that is, more units when markets are down and fewer when they are up) and brings down the average cost over time. In the initial years, gains appear limited because the investment base is small, but as contributions accumulate and returns get reinvested, growth accelerates sharply. Over a 10–20 year horizon, returns generated on early investments form a major share of the final SIP corpus. (Image: Canva)

For instance, a monthly SIP investment of ₹10,000 in Mirae Asset ELSS Tax Saver Fund in December 2015, would have yielded ₹29.51 lakh as of November 30, 2025, on a total investment of ₹11.90 lakh. Formerly known as Mirae Asset Tax Saver Fund, it is an open-ended equity-linked savings scheme (ELSS). There are many such mutual funds to choose from. Selecting the right one plays a crucial role in maximising returns. Investors should assess a fund’s track record, management, and portfolio composition before committing. (Image: Canva)

Calculating returns | Returns on SIPs need not be obscure just because they are long-term. Most investment platforms project how your SIP could grow at an

assumed fixed annual return of 10%, 12%, or 15%. On the other hand, the extended internal rate of return (XIRR) shows how your investment so far has played out. XIRR gives annualised returns after accounting for multiple investments made on different dates. Since SIPs involve monthly cash flows, XIRR gives the most accurate picture of how your investment has really performed. (Image: Canva)

The right time to invest | There is no defined 'right time' to start an SIP. The best time is when you have steady cash flow and can commit to regular investments. The earlier, the better it is. Because SIPs spread investments over time, they reduce the risk of entering the market at a peak and benefit from both market corrections and rallies. Delaying an SIP in the hope of better market conditions often results in missed compounding. (Image: Canva)