Run SIP for a decade to reap rich rewards

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Retail investors have started putting their faith in systematic investment plans (SIP). In the ongoing quarter (July-September), the number of SIPs crossed the 10-million mark. The total number of accounts held by retail investors stands at 46.5 million and about 80 per cent of these are in equity funds, according to data from the Association of Mutual Funds in India (Amfi). But, the majority of investors don't hold their investments long enough to reap the real benefits of SIPs. Only 39 per cent of the investments in equity funds stay with the fund for over two years. If an investor wants to create wealth using SIP, he needs to stay invested for the long term.

If you had continued investing Rs 5,000 a month for the past 10 years, you would have more than doubled your principal. This would have happened despite the 2008 global crisis and the 2011 European sovereign debt crisis, both of which led to significant downturns. In the table along side are the 10-year SIP returns offered by some of the best-performing equity funds in various categories.