Will Your Mutual Fund Returns Be the Same Every Year? What to Plan For Instead

You open a SIP calculator, type 12%, and watch a neat curve climb for fifteen years. It looks like a promise. It is a model of an average, and the real path will look nothing like that curve.

Mutual fund returns change every year. Some years are strong, some are flat, some are negative. This article shows you how much they change, using real index data, and then walks through a worked SIP example so you can see why the order of those years matters more than most calculators admit.

The short answer: no, and the gap is large

Equity fund returns follow the market, and the market does not repeat itself. Take the Nifty 50, the index of India’s 50 largest listed companies. These are its calendar-year price changes, as compiled by Stable Investor:

Across these 14 years, the one-year figure ranged from -4.1% to +31.4%. Only 2019 landed on 12%. Seven of the 14 years finished at 12% or higher, and seven finished below it.

Go back further and the swings widen. On the Nifty 50 Total Returns Index, which includes dividends, the financial year 2008-09 fell about 35%, and the next year, 2009-10, rose about 75% (source table).

And 2026 is showing the other side. The Nifty 50 closed at 22,555.75 on 5 October 2026, against 26,129.60 at the end of 2025. That is roughly 14% lower on price alone. Check the latest figures on the NSE Indices site before you rely on these, because they change daily.

None of this predicts what comes next. It shows what “average return” hides.

Why calculators draw a straight line

A SIP calculator asks for one return number and applies it to every month. That makes the maths simple. It also removes the part of investing that you will actually feel.

What “12% a year” means in a factsheet

When a fund factsheet says 12% over five years, it states an annualised figure. The fund did not necessarily return 12% in each of those years. It means that if growth had been perfectly even, 12% a year would have produced the same end result. Real years inside that period can be +30%, -6% and +4%.

What the calculator assumes

A standard SIP calculator assumes three things: a fixed annual return, a constant monthly amount, and no change in the market around you. You can read a good critique of this in Value Research’s piece on the 12% default. We add one test that most explanations skip: what happens when the average stays the same but the order of the years changes.

Same ten years, three different orders

Here is a worked illustration. We took ten yearly returns that average out to exactly 12% a year when compounded: -12%, +25%, +18%, +4%, +30%, -6%, +15%, +22%, +9% and +23%. Then we ran a ₹10,000 monthly SIP for ten years (₹12 lakh invested) through them, changing only where the two negative years fall. We calculated the SIP’s XIRR, which is the annualised return that accounts for each instalment going in at a different time.

Illustration with assumed returns. It is not a forecast and not drawn from any specific fund.

Look at the gap between the best and worst rows: ₹9.5 lakh on the same ₹12 lakh invested, with the same ten years of returns. A lump sum would have ended in the same place in all three cases, because multiplication does not care about order. A SIP does care, because your instalments are not all invested for the same length of time.

Two lessons follow. A weak market early in a SIP hurts less than it feels, because you are still buying units cheaply and your corpus is small. A weak market in the last two years hurts more, because your corpus is at its largest. That is why the date you need the money matters as much as the return you hope for. We cover this in the start-date lottery.

A hypothetical example: Ananya in Whitefield

Ananya is a 31-year-old software engineer in Bengaluru. We invented her to show a common worry. She wants a ₹25 lakh home down payment in seven years and has started a ₹20,000 monthly SIP.

Her calculator says she is on track. At 12% a year, ₹20,000 a month for seven years grows to about ₹25.8 lakh. At 10% it grows to about ₹24 lakh, and at 8% to about ₹22.3 lakh. Then her fund drops 14% in year four, and the same calculation (12% in every other year) lands near ₹22.1 lakh. She wonders if she picked the wrong fund and considers stopping.

A better question is: “Does my plan still work if the next seven years are uneven?” A plan built on a range of returns, with a lower case she can live with, survives a year like year four. Ananya can raise her SIP when her salary rises, extend the date by a year, or lower the down payment she is targeting. A plan built on a single number leaves her with none of those choices ready.

This is the type of conversation Artha Vridhi’s SIP planning is built around: we set out a goal, a time horizon and a range of outcomes before talking about funds.

Five ways to plan when returns are uneven

1. Match the money to the date. Money you need in under three years has little business in equity funds, because one bad year may not have time to recover.
2. Plan on a range. Test your goal at 8%, 10% and 12%. If it only works at 12%, you have a hope, not a plan. Our post on the 12% assumption shows how.
3. Adjust for inflation. A 12% return with 6% inflation gives you about 6% in real purchasing power.
4. Increase your SIP when your salary rises. An annual step-up does more for your corpus than chasing a slightly better fund.
5. Check progress yearly, not monthly. A yearly review tells you whether the plan still fits. A monthly look at the NAV mostly tests your nerves.

When this does not apply to you

If you need a fixed amount on a fixed date, such as a school fee due in eighteen months, equity mutual funds are the wrong tool. Their value on that date is uncertain by design. Debt funds carry their own risks, and no mutual fund guarantees a return. If certainty matters more than growth, say so before choosing any product.

Frequently asked questions

Are mutual fund returns fixed?

No. Mutual fund returns depend on the market value of the securities the fund holds, so they change every day. Even debt funds can have negative months when interest rates move.

If a fund’s 5-year return is 12%, did it earn 12% every year?

No. It is an annualised figure. The yearly numbers inside that period can be much higher or lower.

Can a SIP give a negative return?

Yes, particularly over short periods. Outlook Money notes that mid and small-cap SIPs between September 2014 and August 2019 likely ended with negative returns (article). Longer holding periods have historically reduced the chance of loss, but history does not guarantee the future.

What return should I assume for planning?

Use a range, not one number. Many planners test 8%, 10% and 12% for equity-heavy goals. Your mix of equity and debt should drive the range, not a headline number.

Is a down year a reason to stop my SIP?

Not by itself. It is a reason to check whether your goal date and asset mix still fit. We cover that in our down-year checklist.

Where can I talk this through?

Message us on WhatsApp with your goal and time horizon. We will respond with questions, not a sales pitch.

Disclosures

Mutual fund investments are subject to market risks, read all scheme-related documents carefully.

Artha Vridhi is an AMFI-registered Mutual Fund Distributor (ARN-362803). This article is for education and is not personal investment advice. Illustrations use assumed numbers and are not forecasts or promises of return. Past performance may or may not be sustained in future. Distributors are paid commission by fund houses on regular-plan investments.