How SIPs Help Build Wealth Over Time
Written by Mariyam Sara
2 min read | Updated on October 31, 2025, 15:41 IST
Power of Compounding
Disciplined Investing
The 15-15-15 Rule of Investing in a Mutual Fund
How to Invest in Mutual Funds?
Tax Implications of SIP Investments
Upstox is a leading Indian financial services company that offers online trading and investment services in stocks, commodities, currencies, mutual funds, and more. Founded in 2009 and headquartered in Mumbai, Upstox is backed by prominent investors including Ratan Tata, Tiger Global, and Kalaari Capital. It operates under RKSV Securities and is registered with SEBI, NSE, BSE, and other regulatory bodies, ensuring secure and compliant trading experiences.
Mutual funds are a godsend for investors wanting to create long-term wealth without actively managing their portfolio and monitoring the markets. In Mutual Funds, the experienced fund managers manage and allocate the fund that increase return while minimizing the risk involved.
You can start investing in a Mutual Fund by paying a lump sum amount or SIP (Systematic Investment Plan) starting at just ₹500. Let’s understand how SIP builds your wealth over time.
Power of Compounding
Albert Einstein called compounding the 8th wonder of the world, and rightly so. When you invest in Mutual funds, an average return of 12% is earned on the invested amount. This amount is then reinvested, which helps you earn returns on your returns.
In the beginning, the return would be modest, but after 8-9 years, the power of compounding shines. The combination of your initial investments, re-invested returns, and regular SIPs helps you outpace your capital by compounding.
Let’s understand this with an example,
Suppose your mutual fund offers an average 12% annual return on a disciplined ₹10,000 SIP for a term of 30 years can grow to ₹3.8 crores.
Disciplined Investing
SIPs require you to pay a fixed amount regularly, helping you make disciplined investments. SIPs help you invest consistently and without recklessly investing based on short-term market volatility.
When the markets are down, the value of your mutual fund units will be lower, and during a bullish market, the value of your mutual fund units will increase. When you make SIPs regardless of the prevailing market conditions, you learn to handle market volatility effectively.
The 15-15-15 Rule of Investing in a Mutual Fund
The famous 15-15-15 rule in Mutual funds is a strategy that helps you create a corpus of ₹1 Crore by investing ₹15,000 every month for a period of 15 years with an annual 15% return.
By investing a total of ₹27 Lakhs over 15 years, with ₹76 Lakhs returns on investment re-invested, you get a corpus of approx ₹1 Crore.
How to Invest in Mutual Funds?
When picking a Mutual Fund to invest in, due your due diligence to find a mutual fund that will help achieve your long-term financial goals.
Select Mutual Fund Type
There are different types of mutual funds that exclusively invest in a particular security, like equity mutual funds and debt mutual funds, or a hybrid mutual fund that invests in both debt instruments and equity.
Mutual funds have different themes where the funds are invested in particular sectors, like the automobile sector or the IT sector.
Most investors prefer to invest in an Index like Sensex or Nifty 50, which consists of top-performing companies across different sectors.
Risk and Return of The Mutual Fund
Mutual funds usually have a riskometer that shows the risk levels of investing in mutual funds. Invest only if your risk appetite matches the riskometer.
Mutual funds also have a CAGR (Compounded Annual Growth Rate) is the average annual return the mutual fund has earned historically. Go for funds with stable returns across all market conditions.
Check The Expense Ratio
For the fund management services provided, the mutual fund charges certain expenses. Pick a mutual fund with a low expense ratio and check if any redemption fee is charged by the mutual fund.
Tax Implications of SIP Investments
Short-Term Capital Gain Tax (STCG)
If you redeem your mutual fund investments within a year, the capital gains are taxed at your income tax rate.
Long-Term Capital Gain (LTCG)
If you redeem your mutual fund units after 12 months, 12.5% with ₹1.25 Lac exemption.
Tax Savings Mutual Funds
Tax Saving Mutual funds like ELSS offer tax benefits as per Section 80C of the Income Tax Act.
Mutual funds are suitable for novice investors who wish to pay periodic fixed payments without having to actively manage their investments. There are various types of mutual funds you can choose that align with your risk appetite and financial goals.
About Author
Mariyam Sara
Sub-Editor
holds an MBA in Finance and is a true Finance Fanatic. She writes extensively on all things finance whether it’s stock trading, personal finance, or insurance, chances are she’s covered it. When she’s not writing, she’s busy pursuing NISM certifications, experimenting with new baking recipes.
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