What is SIP Formula 10x21x12?
SIP (Systematic Investment Plan) is a popular method among investors, but the 10x21x12 formula is a special strategy that can make you a millionaire in the long term. This formula is based on three numbers:
– ₹10,000: Monthly investment
– 21 years: Investment period
– 12%: Annual return (estimated)
According to this formula, if you invest ₹10,000 every month for 21 years in equity mutual funds through SIP and assume an average return of 12%, then your corpus can reach around Rs 1.2 crore!
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| Source:Freepik |
How does this SIP Formula 10x21x12 work?
The benefits of SIP depend on compounding and time. Let's understand this with an example:
– Monthly investment: ₹10,000
– Total period: 21 years (252 months)
– Estimated return: 12% per annum (monthly compounding)
Total investment amount: ₹10,000 x 252 = ₹25.2 lakh
Estimated Maturity Amount: ≈₹1.2 Crore ([As per SIP calculator]) You can check this on any SIP calculator
Here the magic of compounding works. In the initial years the returns will seem small, but after 15-20 years your money will grow exponentially.
Why is this SIP Formula 10x21x12 Strategy effective?
1. Long term focus: 21 years covers the ups and downs of the market.
2. Disciplined investment: Month-to-month investment builds a habit.
3. Rupee cost averaging: Benefit of buying more units in falling stock prices.
How reasonable is the 12% return estimate?
Equity mutual funds in India have given 12-15% CAGR in the last 20 years (based on Nifty 50 index). However, returns depend on market risk. But in the long term, equity has always performed better.
3 important tips to become a millionaire:
1. Start on time: If you start at the age of 25, you can become a millionaire by the age of 46.
2. Risk tolerance: Mental preparation is necessary for investing in equity.
3. Rebalancing: Check the portfolio every 5 years.
SIP Formula 10x21x12 works on patience and discipline. If you invest ₹10,000/month from today, then after 21 years your hard work can touch the figure of one crore. “Time and compounding” is the right way to make the eighth wonder of the world in your favor!
FAQ: Questions related to SIP Formula 10x21x12
Q1. Will this formula work in the short term?
=>No, this strategy is effective only in the long term (15+ years).
Q2. Will there be tax?
=>LTCG tax (10% above ₹1 lakh) is applicable on equity SIP after 1 year.
Q3. Can you start with less investment?
=>Yes! Start with ₹5,000/month and increase it later.
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