I have said this many times, and am repeating it. Repeating it again (tautology, I know).

If you hold a portfolio over a long period of time you will get returns in the early double digits. However this will not happen in a nice smooth linear fashion. One of the years that you held the shares the market will give you a sensational return like 40% or 89%. Missing that is like missing the most important part of cricket match!

Take the year 2014-15. Assuming that you were invested in a good fund that gave you 50% return, imagine what it has done for your portfolio.

Assuming you had Rs. 1 crore in equity, this one year put Rs. 50L into your kitty. Fairly obviously you understand the impact of Rs. 50L on your retirement corpus. If your annual expenses (estimated) was Rs. 4 lakhs, this ONE YEAR ALLOWED you to buy 12 years of retired life. I hope you are appreciating living in the Mecca of taxation as far as equity is concerned.

How much is Rs. 50L worth? Assuming that currently you are able to invest Rs. 3 lakhs a year, this is 17 years savings effort.

I have put the efforts and rewards in dark just to tell you the importance of one good year. A 50% year is not followed by another big year. Please learn to temper your expectations. Over the next 3-4 years the market may not have another 50% year, but you will have to stay invested to get the next 50% year.

When will it be? 2017? 2018? 2020? well nobody knows. Exactly the reason why you should do the following:

– continue your dull, boring SIP which can create wealth

– understand that whether you choose Franklin India blue ship, Icici Prudential Value Discovery Fund, Hdfc Equity fund, Hdfc Prudence fund – it will not really matter too much.

– start TODAY. Call me if you need my ARN and EUIN.

– there is no point in postponing, or committing small amounts.

– the example talks of Rs. 1 crore accumulation. However if you are young and have only Rs. 10L in equity funds, do not despair.

– commit serious amounts to equity. If you have a CTC of Rs. 11 lakhs, it does not make any sense to do a SIP of Rs. 2000 pm

– auto step up SIP schemes are now available. So even if you start small (say Rs. 6000 per month) sign up for an auto top up of Rs. 1000 per month. So next March (March 2016) the SIP will automatically move to Rs. 7000 per month…..thus in 10 years time you will be doing a SIP of Rs. 16k per month..and you would not have even felt the pinch.


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  1. in 5 years time I managed to multiply my sip over 12 times still the guilt feeling of being less committing is not reducing…. 🙁

  2. what should be the perfect monthly net in hand income/SIP ratio ? say making in hand Rs.50,000, a family of 2/4, living in one of the top 10 cities, 30-40 yr old.

  3. Hello sir

    I started reading your blong since last 2-3 months and became fan of your simple wirting skill with good story telling method for educating about financial planning.

    Where i can get your contact details?

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