For millions of Indians, the journey toward financial freedom begins with a Systematic Investment Plan (SIP). The idea is simple and widely accepted: invest a fixed amount every month, stay invested for decades, and let the power of compounding do the heavy lifting. SIPs are often projected as a straightforward path to wealth creation.
But what if the much-talked-about ₹2.6 crore corpus from a ₹10,000 monthly SIP does not actually make you “rich” in the future? This is the lesser-discussed reality—or the so-called dark side—of SIP investing that many investors overlook.
Let us assume you invest ₹10,000 every month for 30 years and earn an average annual return of 12 percent. On paper, your investment grows into a corpus of nearly ₹2.6 crore. At first glance, this figure looks impressive and gives a strong sense of financial security.
However, the real story begins when inflation enters the picture.
Inflation does not just reduce the value of your savings; it steadily increases your cost of living as well. If inflation averages 4 percent over 30 years, the purchasing power of ₹2.6 crore will be equivalent to roughly ₹80 lakh in today’s terms. If inflation rises to 6 percent, the real value drops further to around ₹45 lakh. At a higher inflation rate of 7 percent, the purchasing power of your ₹2.6 crore corpus shrinks dramatically to nearly ₹32 lakh.
In simple terms, what looks like “crorepati wealth” today may only support a modest lifestyle in the future. This is why many experts call inflation the biggest hidden risk in long-term investing.
Inflation affects both sides of your financial equation. While it reduces the real value of your corpus, it simultaneously pushes your expenses higher. A household that manages comfortably on ₹40,000 per month today may need ₹2–3 lakh per month after 30 years.
In such a scenario, a ₹2.6 crore retirement fund could last barely 10–12 years, especially if healthcare and lifestyle costs rise faster than expected. Without proper planning, investors risk outliving their savings.
Financial planners often recommend a step-up SIP to counter inflation. This strategy involves increasing your SIP contribution periodically, usually in line with income growth. For example, you may start with ₹10,000 per month and increase it by 10 percent every year—₹11,000 in the second year, ₹12,100 in the third, and so on.
Over 30 years, your total investment in a step-up SIP would be around ₹1.98 crore, compared to just ₹36 lakh in a flat SIP. Thanks to compounding, the final corpus could reach nearly ₹6.5 crore instead of ₹2.6 crore.
Even after accounting for 6 percent inflation, the real value of this larger corpus would be close to ₹1.1 crore in today’s terms—an amount that offers far greater financial comfort.
Absolutely. SIP remains one of the smartest and most disciplined ways to invest in mutual funds. It helps build a habit of regular investing and reduces the impact of market volatility. However, treating SIP as a “set and forget” tool can be a costly mistake.
As your income grows, your investments must grow too. A static SIP may look good in projections but may fall short of real-life needs decades later.
To protect your wealth from inflation, consider these practical steps:
Increase your SIP amount by at least 5–10 percent every year.
Diversify beyond equities by including gold, real estate, or international funds.
Understand real returns: a 12 percent return with 7 percent inflation means only 5 percent real growth.
Maintain a balanced portfolio to avoid over-dependence on a single asset class.
Starting a ₹10,000 SIP is easy, but growing it wisely is what truly builds long-term wealth. A ₹2.6 crore corpus may sound impressive, but it loses meaning if it can only buy what ₹45 lakh or ₹32 lakh buys today.
SIPs do create wealth—but real wealth is created only when your investments grow faster than inflation. That is why experts consistently advise reviewing and increasing your SIP regularly, ensuring your hard-earned money retains its power in the future.
Disclaimer: This article is for informational purposes only. Mutual fund investments are subject to market risks. Investors should consult a qualified financial advisor before making any investment decisions.
