SIP ₹5,000/Month for 10 Years: Real Returns

What You Invest vs What You Get

Over 10 years you contribute ₹6.00 L from your pocket (₹5,000 × 120 months). At a 12% CAGR that becomes ₹11.62 L, so compounding adds ₹5.62 L on top of what you put in. The longer you stay invested, the larger this gains-to-contribution ratio becomes.

The Number Apps Don't Show: Real Value

₹11.62 L in 10 years is not ₹11.62 L of today's purchasing power. After 6% average inflation, it buys what about ₹6.49 L buys today. That's still real growth: your money grows faster than prices, but the honest figure is the inflation-adjusted one, not the headline number.

Tax on Your Gains (LTCG)

Equity mutual fund units held over 12 months qualify for Long-Term Capital Gains tax: 12.5% on gains above the ₹1.25 lakh annual exemption (Income Tax Act 2025). On ₹5.62 L of gains, a one-shot redemption implies roughly ₹56,770 in LTCG tax, leaving about ₹11.05 L. Redeeming in tranches across financial years lets you use the ₹1.25 lakh exemption each year and can reduce this materially.

How to Improve This Outcome

₹5,000/month for 10 years. This is enough to build a useful base, but a flat contribution can fall behind as your income and goals grow. Link the SIP to a specific target and consider increasing it after a salary hike if expenses and emergency savings are already covered.

• Step up the SIP. Raising ₹5,000 by 10% every year as your income grows beats a flat amount by a wide margin over 10 years.
• Stay the full tenure. The biggest compounding happens in the later years: stopping early forfeits most of the gains.
• Keep costs low. A direct-plan Nifty 50 index fund (0.1–0.2% expense ratio) preserves more of the 12% than a high-cost regular plan.
• Redeem in tranches. Spreading withdrawals across financial years uses the ₹1.25 lakh LTCG exemption repeatedly.