Certified financial planner Ritesh Sabharwal advocates the 10-7-10 mantra for SIP investors: expect 10% annual market volatility, stay invested for at least 7 years, and increase SIP contributions by 10% every year. This disciplined approach helps generate higher long-term wealth and withstand market fluctuations effectively.
Investors frequently seek methods to enhance returns from their Systematic Investment Plans (SIPs). Ritesh Sabharwal, a personal finance expert, shares a straightforward but highly effective “10-7-10” mantra to improve long-term SIP outcomes. According to him, successful investing is more about consistent behaviour than trying to time the markets.
1. Expect 10% Annual Market Fall:
Sabharwal advises investors to build resilience for market volatility, noting that Indian equity markets have experienced a 10% decline in 20 of the past 23 years. Instead of panicking, investors should remain committed to their SIPs through these downturns, benefiting from rupee-cost averaging and buying more units at lower NAVs.
2. Stay Invested for More Than 7 Years:
Historical data reveals that equity investments held for seven or more years have always yielded positive returns. The compounding effect grows stronger over time, cushioning short-term shocks. Sabharwal stresses patience as a critical factor, which ensures steady wealth creation.
3. Increase Your SIP Contributions by 10% Annually:
Incrementally raising SIP amounts by 10% each year helps counter inflation and aligns investment growth with rising incomes. For example, a ₹20,000 monthly SIP at 12% returns grows to ₹46 lakh in 10 years; increasing SIP by 10% annually boosts this to around ₹67 lakh. Even a smaller increment like 5% can make a significant difference.
Why the 10-7-10 Rule Works
This mantra isn’t about chasing the highest returns but about building a sustainable investment habit that can weather market ups and downs. It encourages disciplined contributions, patience, and gradual portfolio growth aligned with financial capacity.
Sources: India Today, Finnovate, Moneycontrol, YouTube, LinkedIn