How investing via SIPs for over 10 years helped them strike it rich

medium120521008In March, 40.2 lakh new systematic investment plans (SIPs) were registered — the lowest in the past 12 months, according to data by the Association of Mutual Funds of India (Amfi). This dip reflects growing investor caution, a contrast to July 2024, when 72.6 lakh new SIPs were registered as the BSE Sensex ended the month at 81,741.34 points. The figures for SIP discontinuation have also gone up this year. While this includes SIPs whose tenures have ended, experts say a large chunk of it reflects money being pulled out due to market conditions.Amid the jitters, some investors stay the course with SIPs through highs and lows. Do they never fear volatility? ET Wealth spoke to three investors whose SIPs have run for over a decade. Here’s how they stayed steady — and found their pot of gold.Firm focusBorn and raised in Mumbai, Manoj Gurnani moved to Dubai in 1995. When his daughter was born in 2005, he wasted no time in planning for her higher education. He was clear: when she turned 18, he would hand over the investments to her — with one condition — the SIPs must continue. He began with two SIPs of ₹5,000 each in Kotak Bluechip Fund and Sundaram Mid Cap Fund.As a businessman, he knew income could fluctuate. But he was certain about two things: his daughter Lavya would pursue undergraduate and higher education abroad, and that India’s long-term growth, backed by its democratic foundation, was worth investing in. That’s why even when his business hit a rough patch in 2014-15, he stayed committed to his SIPs. medium120520788Both have rewarded him well — his investment of ₹20.35 lakh is now worth ₹1.09 crore. Fortunately, he never had to break his SIPs. His daughter has been studying accounting and finance in London for the past two years. “School education in Dubai is very expensive, so we knew we needed a solid plan,” he says.A key factor behind Gurnani’s perseverance has been his mutual fund distributor, Vinod Jain Investments — one of India’s largest Mumbai-based MFDs. He has stayed with the firm, and with the same relationship manager, Dinesh Singh, since 2005 when he started his first SIP.“Those who take advantage of volatility, rather than get swayed by it, can make money through SIPs,” says Navneet Munot, managing director and CEO, HDFC Asset Management.One mistake that Gurnani regrets is not topping up his SIPs. “I should have increased them by 5-10% annually. I didn’t factor in inflation,” he says.A back-of-the-envelope calculation shows that topping up a ₹1,000 SIP by just ₹100 a year from age 23 could grow to ₹1.4 crore by 60 — compared to ₹82.75 lakh without top-ups.To make up for this lost opportunity, Gurnani invested ₹50 lakh in a Nifty 50 index fund in 2022. Three years ago, he also began a third SIP of ₹10,000 per month, which he now plans to raise to ₹15,000. Apart from mutual funds and some direct equities, he also invests in real estate and believes in international diversification.His biggest lesson? “Market uncertainty is real. The business climate can change,” he says. medium120520848The top-up advantageScientist Krishna Bora from Jorhat, Assam, began investing in 2001 on a friend’s suggestion, unaware of how mutual funds worked. He put in ₹5,000 and forgot about it. Four years later, when he needed cash, it had grown significantly. The fund? Franklin India Bluechip Fund (FIBF).Intrigued by the potential of equity investments, Bora started reading up on mutual funds and SIPs. Still, it took him another five years to start his first SIP, after connecting with Mumbai-based MFD Gajendra Kothari, who was connected to Bora’s hometown. He began with two ₹1,000 SIPs — one in FIBF and the other in HDFC Flexi Cap Fund (HFCF).Bora played it smart. By then, he was convinced that not just regular investing, he also needed to top up his investments, as his salary grew. In 2013, he topped up both his SIPs by ₹2,000. In 2020, he again topped up his SIP in HFCF by another ₹2,000. Both his SIPs continue till date.Meanwhile, in 2016, he started four more SIPs. Today, he invests ₹16,000 across his six SIPs. The current market conditions don’t scare him. “This time, though markets are in the negative, I’m in a profitable position as my SIPs have been running for long,” he says.He tried investing in direct equities, but says that “a lot of research is required to be able to buy the right company’s shares”, so he has postponed it to after his retirement. Bora’s main financial goal is to fund his daughter’s higher education and to build a post-retirement corpus.While Bora has shown strong discipline in understanding equity markets and staying invested through SIPs, his financial planning has one major gap.At 57, with just three years to retirement, he still doesn’t have a comprehensive health insurance policy. “I wish I had bought one when I was younger. But I plan to buy one soon, definitely before I retire,” he says.Interestingly, Bora’s mutual fund distributor, Gajendra Kothari, is also known for his long-term approach. His longest-running SIPs — two DSP Mutual Fund schemes — have been active for 15 years. medium120520881Disciplined growthMeet Navi Mumbai-based Sumit Mayadeo, 51, who started investing in 1999 when he got his first job. At that time, his main investments were the Public Provident Fund, endowment insurance plans and National Savings Certificates.After seeing stock market ups and downs in the early 2000s, he made his first investments in MFs in 2005. He started two SIPs of ₹1,000 each in FIBF and HSBC Large Cap Fund (HLCF).In 2007, he started a third SIP in Sundaram Mid Cap Fund. In 2011, he switched his SIPs from FIBF to Franklin India Growth Fund (without withdrawing from FIBF) and topped up his HLCF SIP by another ₹2,000 a month.He continues with all these SIPs, and has earned 11% in FIBF, 12% in HLCF and 19% in Sundaram Mid Cap Fund. Presently, he invests ₹50,000 across 12 mutual fund schemes, through SIPs.Mayadeo’s goal is to fund his retirement. “Since I do not work in the government sector, I won’t get a regular pension. So, I have to fend for myself,” he says.He doesn’t get intimidated by the long-term nature of SIPs. “I have seen the Harshad Mehta scam, Ketan Parekh scam, CR Bhansali scam, and the 2008 subprime crisis… the equity market always recovers in the long run. If you stay invested, your chances of making money are high,” he adds.Like Bora and Gurnani, Mayadeo has been guided by the same distributor since the start of his investment journey.His distributor is Krushna Finserv, founded by Sanjay Khatri. Khatri and his team are known for helping clients maintain long-running, consistent SIPs.Mayadeo believes in topping up SIPs every year with salary increments. His rule: invest 50% of your annual salary hike into existing SIPs, and use 10-15% for lifestyle upgrades. medium120520962 medium120520451How to make SIPs workSIPs are not a magic wand. Here are three ways to get the best out of your SIPs.Patience paysAn SIP in equity works well when you give it time. A study by Hexagon Wealth shows that SIPs started every year on March 1 between March 2000 and March 2024, for a period of 1 year, 5 years and 10 years have different levels of volatility in terms of returns. The maximum 1-year SIP return was 108% and the worst return was a loss of 52%. Over a 10-year period, the returns look more normal; the best SIP return was 21%, the worst was 3%. “An SIP doesn’t take away the volatility of the underlying asset, it just cushions it,” says Kalpen Parekh, managing director and chief executive, DSP Asset Managers.Buy in falling marketsSIP works best when you persist through rising as well as falling markets. “It is when markets fall that you get to buy more units for the same amount. If you are only buying units on the way up and not on the way down, you reduce your gains,” says Srikanth Bhagavat, managing director of Hexagon Capital Advisors.Step it upSIP appeals more to those who have a regular income and want to channelise a part of it every month. But it works better if you top it up once a year, preferably when you get your annual salary increments. “This helps you reach your goals faster,” says Satish Prabhu, head - products & content development, Franklin Templeton Asset Management (India). medium120520451Do equity MF SIPs beat market volatility, guarantee returns?All hell broke loose in February after ICICI Prudential Asset Management’s executive director and chief investment officer Sankaran Naren told a closed group of mutual fund distributors at a conference in Chennai that valuations in small- and mid-cap stocks had reached absurd levels. He exhorted investors to withdraw from small- and mid-cap funds.But what caught everyone’s attention was his next comment where he asked investors to avoid investing in small- and mid-cap funds even through SIPs. He said that if you had been investing in mid- and small-cap funds through SIPs in 2023 or later, your chances of getting poor returns were very high, unless you stayed invested for 20 years. That set us thinking: Do SIPs work?We decided to put SIPs to the test. Can investors really lose money through SIPs? And what’s the best way to make them work for you? To find out, we partnered with Crisil Intelligence — one of India’s largest research and rating firms — for an in-depth study. Together, we analysed SIP performance across tenures and equity schemes. Presenting the ET Wealth-Crisil Intelligence SIP Study. medium120521415Mining the dataThe study encompasses exclusively pure equity funds, where the majority of SIP investments are made. It covers seven key equity categories: large-cap, mid-cap, small-cap, large & mid-cap, flexi-cap, multi-cap, and tax-saving (equity-linked savings) schemes. Only funds with a track record of at least 15 years were considered — 110 in total. The analysis spans SIPs running between March 31, 2010 and March 31, 2025.While investors can start SIPs on any day, the study considered those that began at the start of each month. SIPs were evaluated across tenures ranging from 1 to 10 years. For each tenure, multiple rolling periods were analysed with a one-month shift. This means that for each SIP there were 169 instances for 1-year SIP, 157 for 2-year SIP, and so on, down to 61 instances for 10-year SIPs. The study focused on three key metrics: minimum returns (worst-case), maximum returns (best-case), and average SIP returns. Only growth option schemes were considered for this study. medium120521443How much is long-term?Experts say that you must invest for the long-term. But how long is long-term? The study finds that SIPs across equity fund categories don’t result in losses if held for at least 10 years. That’s the point where returns consistently turn positive. Note, the study encompasses schemes across seven categories.Large-cap funds start rewarding investors slightly earlier. The study shows that SIPs in large-cap funds don’t lose money if continued for at least nine years. Small- and mid-cap funds, being riskier, take about 10 years. “But there’s hardly any difference between SIPs in large-cap and small- or mid-cap funds, as both show similar risk trends over longer tenures,” says Piyush Gupta, director - consulting, financial services, Crisil Intelligence.Multi-cap and flexi-cap funds give you results a bit faster, as per the study. If you hold a multi-cap fund for at least seven years or a flexi-cap fund for at least eight years, you don’t lose money. Remember: This is just a study based on a set of schemes for a definite period. Therefore, the break-even period (beyond which you don’t incur losses) is at best indicative. The actual needle would move up or down, depending on your entry and exit time.D Muthukrishnan, a Chennai-based mutual fund distributor, goes a step further. Known in the MF circles for advocating long-term SIPs, he says that 10 years should be the minimum, not maximum, time frame that investors should run their SIPs. “Your SIP should last at least one full business cycle, not just an equity market cycle,” says Muthukrishnan. 120521493 120521512 medium120521523Short-term can be volatileAlthough equity funds pay off well if you are a patient investor and hold on for longer tenures, they can be highly volatile in the short term. Consider this. Over 1-year, 2-year and 3-year SIPs, the lowest returns across funds was -33.80%, -8.80% and -3.80%, respectively. The best-performing SIP return across all funds over these periods was 174.20%, 129.40% and 74.90%, respectively. The variance comes down as the tenure goes up.SIPs need timeThat’s the big issue. However, the reality is that although equities outperform all other asset classes over time, there is no guarantee of returns.But the probability of losses goes down as time goes by. Of the 18,590 1-year SIP returns we analysed, funds lost money 24.94% of the time. This figure dropped to 9.73 % for 2-year SIPs, 3% for 3-year SIPs, and 1.09% for 4-year SIPs. Put it simply, the probability of losing money in a SIP goes down as the time horizon goes up. medium120521468Not losing money is not enough. Investors expect good returns as well. The probability of getting more than 10% returns is more than 80% for tenures of five years or more. The probability of getting more than 10% SIP returns is 89.1% for 10-year SIPs. The probability of getting more than 15% SIP returns on a 10-year tenure is 45.3% and more than 20% is 8.4%. On average, 10-year SIPs deliver returns of 14.6%.