Corpus: ₹5.0L at 12% · Total invested: ₹1.2L · Wealth gain: ₹3.8L
| Annual Return | Total Invested | Maturity Value | Wealth Gain |
|---|---|---|---|
| 8% | ₹1,20,000 | ₹2,96,474 | ₹1,76,474 |
| 10% | ₹1,20,000 | ₹3,82,848 | ₹2,62,848 |
| 12% | ₹1,20,000 | ₹4,99,574 | ₹3,79,574 |
| 14% | ₹1,20,000 | ₹6,58,173 | ₹5,38,173 |
| 15% | ₹1,20,000 | ₹7,57,977 | ₹6,37,977 |
A ₹500/month SIP is an ideal starting point for first-time investors. At this amount, even on a modest salary, you can build the discipline of consistent investing without straining your monthly budget. A 20-year SIP tenure is where compounding truly transforms wealth. At this horizon, short-term market volatility becomes irrelevant. A ₹500/month SIP invested for 20 years turns ₹1.2L of principal into ₹5.0L — a wealth gain of ₹3.8L.
At a 12% annualised return — the long-run historical average for diversified equity mutual funds in India — a ₹500/month SIP for 20 years produces a corpus of ₹5.0L. This is enough to fund a meaningful contribution toward a car purchase, wedding expenses, or higher education. Of course, actual returns will vary, but this gives you a realistic benchmark for goal planning.
The power of compounding is clearly visible in this SIP: your ₹1.2L investment grows to ₹5.0L, generating ₹3.8L in wealth gain (316% return on invested capital). Notably, roughly ₹3.8L of your total wealth gain — more than half — is generated in the second half of the 20-year period. This is the compounding snowball effect: the longer you stay invested, the faster your corpus grows.
This table shows how your SIP corpus builds year by year, assuming 12% annual returns — the long-run historical average for diversified equity funds.
| Year | Total Invested | Corpus Value | Wealth Gain |
|---|---|---|---|
| Year 1 | ₹6,000 | ₹6,405 | ₹405 |
| Year 2 | ₹12,000 | ₹13,622 | ₹1,622 |
| Year 3 | ₹18,000 | ₹21,754 | ₹3,754 |
| Year 4 | ₹24,000 | ₹30,917 | ₹6,917 |
| Year 5 | ₹30,000 | ₹41,243 | ₹11,243 |
For a 20-year SIP, you have maximum flexibility to take risk and benefit from long-term compounding: Small Cap Funds — historically highest returns over long horizons (15%+ CAGR), suitable for 20+ year tenures; Mid Cap Funds — strong risk-adjusted returns; Large Cap Index Funds — stable core holding; International/Global Funds — geographic diversification against INR depreciation. A classic allocation: 40% large cap index + 30% mid cap + 20% small cap + 10% international.
Calculate with different amounts, rates, and tenures
Open SIP Calculator →At 12% annual returns, a ₹500/month SIP for 20 years gives a maturity corpus of ₹4,99,574. Your total investment is ₹1,20,000 and the wealth gain is ₹3,79,574.
At 8%: ₹2,96,474. At 10%: ₹3,82,848. At 12%: ₹4,99,574. At 15%: ₹7,57,977. Returns are not guaranteed — equity mutual funds can deliver higher or lower depending on market conditions.
SIP returns are subject to capital gains tax. For equity mutual funds held for more than 1 year, gains above ₹1 lakh/year are taxed at 12.5% (LTCG). ELSS SIPs have a 3-year lock-in but qualify for Section 80C deduction up to ₹1.5 lakh/year.
Yes — this is the entire benefit of SIP. When markets fall, your ₹500 buys more units at lower prices (rupee cost averaging). Stopping a SIP during a downturn defeats the purpose and locks in temporary losses.
For a 20-year horizon, a diversified equity mutual fund — large cap index fund (Nifty 50 or Sensex) combined with a mid cap fund — is a strong choice. For higher risk appetite, include a small cap fund component.