If you did an SIP for every single month – the same amount – for a long time,then how have your returns been? Look at five and ten year returns:
Rolling SIP means that on May 31, 2014, I will consider my return as what I would have got if I had invested in the Sensex every month since May 2009 (five year SIP).
- The Sensex data shows phenomenal returns in the last century on a five and 10 year period.
- In the early part of this century, 2000-2004, was a lousy period for stocks overall. So 10 year and 5 year SIP returns were sub 10% as well.
- From 2005 we have not see the 10 year return dip below 10%.
- The five year return went to zero in 2012-13, but has recovered. Today it stands at +10.7%.
And the Best Part
To maintain a 10 year SIP return of 10%, in December 2017, the Sensex will have to be at 52,700.
(Assuming a 2% dividend yield adds up and gives you 12%)
That’s more than double from where we are. If we do get there, it will be one impressive move!