SIP Investment: Today’s youth often postpone saving and investing despite a good income. However, if proper planning is started at a young age, a financially strong future can be achieved. The 20-12-30 SIP formula was developed with this thought in mind, which can help 25-year-olds accumulate a corpus of crores of rupees by the age of 55.
What is the 20-12-30 SIP formula?
This formula suggests that if a young person starts a monthly SIP of Rs 20,000 at the age of 25 and continues it for 30 years, this amount can turn into crores at an average annual return of 12 percent. It is estimated that at the end of this period, the investor will accumulate a corpus of over Rs 6 crore 16 lakh. This figure proves how disciplined and consistent investing can make a huge difference over the long term.
The Effect of Compounding
Over 30 years, the investor’s total outflow is only ₹7.2 million, but the effect of compounding multiplies this amount. An estimated return of over ₹5.44 crore is generated. This power of compounding forces an investor’s money to work for them, and its impact only intensifies over time.
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Why Early Investing is Beneficial
If someone starts the same investment at age 35 and continues for only 20 years, the final corpus will be significantly smaller. This is because compounding yields significant results only over a long period of time. Therefore, the earlier one starts investing, the greater the future benefits. Making responsible financial decisions at a young age can secure their future.
The Role of Discipline in SIP Investments
The biggest benefit of SIPs is that they make you a disciplined investor. Investing a fixed amount every month strengthens the savings habit and reduces the impact of market fluctuations. SIPs have excellent average returns over the long term, enabling investors to achieve larger financial goals.
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A Safe Option for the Young
Today’s youth tend to neglect savings due to their increased focus on expenses. However, starting an SIP early, even with a small amount, can easily achieve larger future goals like a house, vehicle, children’s education, and retirement. This lays a strong foundation for security, stability, and financial independence.
How to Start a SIP
Any investor can start a SIP through mutual fund companies or online platforms. Equity-based funds are considered more effective for the long term. Investors can start with just ₹500 or ₹1000 and gradually increase the amount as their income increases. Patience and regularity are the most important keys to successful investing.