Everyone wants their savings to grow to a good amount over time. The easiest way to do this is to invest in mutual funds through a Systematic Investment Plan (SIP). SIP allows you to invest money in small installments. In this, the investment keeps increasing not only on the money you put in but also on the returns already received, which is called compounding. This compounding makes SIP very effective in the long term.
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When will a fund of 2 lakhs be created with a SIP of Rs 1000
If you invest Rs 1000 every month and get an average annual return of 12% on it, then your fund will gradually grow. According to the SIP calculation, after 10 years, your total investment will be Rs 1,20,000, whose value will increase to Rs 2,32,339. That is, you will get a profit of Rs 1,12,339.
Great benefit from SIP in the long term
If you continue this investment for 15 years, then your total investment will be Rs 1,80,000, and it will increase to Rs 5,04,576. At the same time, if you do SIP for 20 years, your total investment will be Rs 2,40,000, but this amount will increase to about Rs 9,99,148. In this way, you will get a benefit of about Rs 7,59,148. That is, even a small SIP can create a fund of lakhs in the long term.
Even a small amount can change the future
Often, people think that a small amount like Rs 1000 cannot bring any big change. But if you keep patience and continue it for a long time, then with the power of compounding, this amount can reach crores. You can consider SIP as a digital piggy bank, in which a large amount can be collected gradually by putting a small amount every month.
Decide on your goal before investing
Before starting SIP, it is important to decide what your purpose is. Like buying a house, children’s education, marriage, or retirement. To choose the right mutual fund, you must look at the past performance and management of the fund. If you do not understand investment, it would be wise to consult a certified financial advisor.
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What to keep in mind while investing in SIP
The biggest benefit of SIP is available only when it is continued for a long period. In the short term, losses may be seen due to market fluctuations, but in the long run, these risks are balanced. Keep checking the performance of your fund every 1-2 years and make changes in it if needed. Patience and regularity are the biggest mantras of SIP investment.