The biggest secret of becoming rich through SIP! 28 years of historical data revealed 4 big secrets of investment The biggest secret to getting rich through SIPs! 28 years of historical data reveal 4 major investment insights.

If you are also investing your hard-earned money in mutual funds through Systematic Investment Plan i.e. SIP or are thinking of investing, then this question must be coming in your mind that for how long should you invest the money? Amid market fluctuations, which fund of large cap, mid cap or small cap will make your future dreams come true? To remove all these complications, a very interesting analysis of the market data of the last 28 years has come out, which will open the eyes of every Indian investor.

First answer: At least for how many years should SIP be continued?

The first and solid conclusion from the historical data is that time is of the essence in SIPs. If you invest only for 1 to 3 years, then you are afraid of loss due to fluctuations in the stock market. But data shows that as you take your investment tenure from 7 to 10 years or above, your risk of loss becomes almost zero. The magic of ‘compounding’ works in the long run, turning your small investment into a big fund.

Second answer: Large, mid or small cap—where will your money stay?

The data of 28 years has made the situation very clear regarding the performance of funds:

• Large Cap Funds: They invest money in the biggest and strongest companies of the country (like Reliance, TCS). Here the risk is lowest and returns are stable. This is best for new investors or those playing safe bets.

• Mid Cap Funds: They invest in medium companies. According to the data, in the long term they have given better returns than large caps and more stable returns than small caps.

• Small Cap Funds: They invest money in small and fast growing companies. There is a lot of risk in these, but when the market runs fast, these small cap funds earn the highest returns.

Third answer: Who won the return race?

In the long journey of the last 28 years, the market has seen many ups and downs at different times – like the recession of 2008 or the Corona period of 2020. Data is witness that investors who continued their SIP in small and mid cap funds for 15 to 20 years without any fear, have got an average annual return of 15 to 18 percent. At the same time, large cap funds have also maintained very safe and excellent returns of 12 to 14 percent in adverse conditions, which is much higher than bank FDs or traditional savings schemes.

Fourth answer: What is the perfect portfolio formula for Indian investors?

The country’s top financial experts suggest a special formula based on this 28 years of data. To take advantage of India’s rapidly growing economy (GDP), you should not block your money in any one place. For an ideal portfolio, dividing 50 per cent of your total SIP amount between large cap (for stability), 30 per cent mid cap (for growth) and 20 per cent small cap (for extra high returns) proves to be the most sensible and profitable move.