Why SIPs Work Only When You Are at It For Significantly Long Time

Top 10 Updates

• 1. In FY25, small businesses filed over 47,000 applications on the MSME Samadhaan Portal to recover dues worth ₹8,024.9 crore. The highest number of applications were against state governments, central PSUs, and proprietors, with the MSME sector contributing significantly to India's employment and GDP
• 2. The Central govt is projected to collect a record ₹66,000-67,000 crore in dividends from its non-financial CPSE entities this fiscal year, driven by strong profitability of state-run firms, especially in the petroleum, coal, and power sectors.
• 3. Public sector banks' dividend rises 33 pc to Rs 27,830 cr in FY24
• Marking a significant 32.7% rise from the ₹20,964 crore distributed in FY23. This sharp increase reflects the enhanced financial performance and strengthened balance sheets of PSBs.
• 4. EPFO achieves historic high of 2.16 crore auto-claims in FY25
• The EPFO has decided to enhance the auto settlement of advanced claim (ASAC) limit from Rs 1 lakh to Rs 5 lakh, aiming to improve the ease of living for its 7.5 crore members
• 5. India's direct tax revenue has grown by 16.15% in FY 2024-25, reaching Rs. 25.86 lakh crore
• This growth is because both corporate and non-corporate tax collections have gone up. Corporate taxes brought in Rs. 12.40 lakh crore, while non-corporate taxes contributed Rs. 12.90 lakh crore.
• The rise in these taxes shows that more businesses and individuals are paying taxes, which could be due to better business performance, stronger earnings, and better tax collection systems
• 6. Central GST officers detected Rs 1.95 lakh crore tax evasion in 25,397 cases between April and January of the ongoing fiscal
• The government has taken multiple measures to prevent tax evasion, including intelligence inputs and the 'Project Anveshan' for early identification of fraudulent activities
• 7. 40,943 applications were filed under the Insolvency and Bankruptcy Code (IBC)
• According to Union Minister Harsh Malhotra, 28,818 resolved preadmission, involving Rs 10 lakh crore.
• 8. Indian tea industry's export reaches decade high of 255 mn kg in 2024
• 9. FPIs pour ₹32,000 crore into Indian stocks in 6 sessions as valuations correct
• 10. India's top 10 toll plazas collect Rs 13,988 cr in 5 years: Govt data

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Why SIPs Work Only When You Are at It For Significantly Long Time

• No, this article is not about how a SIP (https://en.wikipedia.org/wiki/Systematic_investment_plan) running for long periods (10 years?) lets one weather the market cycles and average your buying cost. Enough has been said about it and that remains. By the way, there’s no standard definition of “LONG PERIOD” as such. It’s left open to investing entity!!!
• This note is more towards accumulating capital, as (high) returns really matter only when they are earned on reasonable amount of capital. Even extraordinarily high returns on piddling capital (savings) don’t amount to much in absolute numbers. And it takes time to build up capital if you are doing it gradually, even after taking impact of compounding.
• Let the numbers come to our help. But first, we need to establish some benchmark to evaluate how long should one run a SIP,alongwith a projected rate of return.
• Here’s a simple benchmark for SIP duration – my investment should double at the end of SIP period for a particular rate of return. I will consider that duration as “LONG TERM”. And for starters, I will also assume that I get an annualized ROI of 12%,which incidentally is the most (ab)used rate of return in goal planning And to get some comparison, we will also do scenario analysis at high annualized ROI of 15% and extraordinarily high annualized ROI of 20%. Time for results:
• - At 12% annualized ROI, it takes slightly more than 10 years 6 months for investment to double
• - At 15% annualized ROI, it takes nearly 8 years 5 months for capital to double, and
• - At 20% annualized ROI, it taken nearly 6 years 4 months for capital to double And while we are at scenario analysis, how about also checking at lower annualized ROI of 10%? It takes slightly more than 12 years 7 months to double the capital.
• While what returns one gets in future are uncertain, what can surely give one a shot at REAL investment success is starting off well informed. If you are going to invest through the most popular way of SIPing it, plan to do it for at least 7 years, and preferably for 10 years plus!!! Chances are you will end up with a very good corpus at the end of your investment horizon!!!

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