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The Sensex Must Double in Three Years For Long Term SIP Returns of 10%

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:

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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).

Important points:

  • 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!

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