What is the average amount of money one can earn on SIP returns per month, quarter, or year?

 The returns from a Systematic Investment Plan (SIP) depend on several factors, including the type of mutual fund, the market's performance, the investment amount, and the duration. Here’s a breakdown of how SIP returns can be estimated:

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1. Factors Affecting SIP Returns

• Type of Mutual Fund: Equity, debt, or hybrid funds have different risk-return profiles.
  • Equity Funds: Historically provide higher returns (10–15% annually) over the long term.
  • Debt Funds: Offer stable but lower returns (5–8% annually).
  • Hybrid Funds: Balanced returns (7–10% annually).
• Investment Tenure: Longer tenures benefit from the power of compounding and market recovery during downturns.
• Market Conditions: Returns fluctuate based on market performance.
• SIP Amount: Larger monthly contributions yield higher absolute returns.

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2. Example Calculation

Let’s consider different scenarios for an equity mutual fund with an average annual return of 12%.

Monthly SIP Investment: ₹10,000

• 1 Year: ₹1,28,000 (Approx. gain: ₹8,000)

  • Total invested: ₹1,20,000
  • Returns depend on the compounding effect and investment duration.

• 5 Years: ₹8,20,000 (Approx. gain: ₹2,20,000)

  • Total invested: ₹6,00,000

• 10 Years: ₹23,20,000 (Approx. gain: ₹11,20,000)

  • Total invested: ₹12,00,000

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3. Average Monthly, Quarterly, or Annual Returns

Using the same 12% annual return assumption:

• Monthly Returns: On ₹10,000 SIP, average monthly gains could range from ₹500–₹1,000 over the long term.
• Quarterly Returns: ₹3,000–₹5,000 (compounding considered).
• Annual Returns: ₹12,000–₹15,000 for the first year, increasing over time due to compounding.

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4. SIP Return Calculation Formula

The returns on a SIP can be calculated using the Future Value of SIP formula:

$$FV = P \times \frac{(1 + r)^n - 1}{r} \times (1 + r)$$

Where:

• $P$: Monthly investment amount
• $r$: Monthly rate of return (annual return ÷ 12)
• $n$: Number of months invested

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Key Insights

1. Short-Term SIPs (1–3 years): Returns can be volatile due to market fluctuations.
2. Long-Term SIPs (5+ years): Averaging out market volatility, the power of compounding generates significant wealth.
3. Consistency Pays: SIPs benefit from rupee cost averaging, which reduces the risk of timing the market.

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Important Considerations

• No Guaranteed Returns: Returns vary; past performance does not guarantee future results.
• Fund Choice Matters: Higher returns are possible with well-performing funds and careful portfolio selection.
• Professional Advice: Consulting a financial advisor can help tailor SIP plans to your goals.

If you want specific estimates for your goals, I can help calculate them based on your SIP amount and duration!