If you have recently got a new job and want to earn a lot of money, then assume that you cannot become rich just by salary. Yes, if you want to live a luxurious life, honestly, then SIP (Systematic Investment Plan) can be a great option for you. In this too, the 12x12x20 formula of SIP can prove to be the best for you. If you adopt this formula, then you can quit your job even before retirement and live a luxurious life.
What is SIP
Before knowing the 12x12x20 formula of SIP, it is very important for you to understand SIP. SIP, or Systematic Investment Plan, is a very disciplined and simple way of investing in mutual funds. In this, the investor deposits a fixed amount in the fund at a fixed time every month. Investment through SIP is done in small installments, which balances the effect of market fluctuations. It is very beneficial for those who want to invest for a long time, as it gives the benefit of rupee cost averaging and compounding. With SIP, you can earn big money over time, even by starting with a small amount.
What are mutual funds after all
When you have understood SIP well, you also know about the place where you have to deposit money – that is, mutual funds. Mutual funds are a means of investment, in which money is collected from many investors and invested in shares, bonds, debentures, gold, and other financial instruments. It is managed by professional fund managers of the Asset Management Company (AMC). The objective of mutual funds is to give better returns to investors through diversification and risk management. In this, investors can choose different schemes like equity, debt, or hybrid funds according to their risk capacity and goals.
How to earn big money from SIP mutual funds?
Investing in mutual funds through SIP makes money in a regular and disciplined manner. In this, the investor invests a fixed amount in a mutual fund scheme every month or at fixed intervals. Over time, you get the benefit of rupee cost averaging and compounding of at least 12%. When the market fluctuates, investors sometimes buy fewer units and sometimes more, which reduces the average cost. In the long term, when the value of the fund increases, the investor gets great returns. In this way, stable and regular wealth creation is possible with SIP.
The magical 12x12x20 formula of SIP
To understand the 12x12x20 formula of SIP, you now have to understand this math a little seriously. Suppose you are 30 years old and you have just got a job. If you want to earn a lot of money along with the job, then you should take out ₹ 12,000 from your salary every month and deposit it in a mutual fund. When you deposit ₹ 12,000 every month, you will get a compound interest of about 12% per annum on your deposit. You have to do this work continuously for 20 years, and then you will be able to earn an extraordinary amount.
Golden opportunity to become a millionaire
If you deposit ₹ 12,000 in mutual funds through SIP every month, then in the next 20 years, a total of ₹ 28.80 lakh will be deposited in your fund. Now, on this amount, you will get around ₹ 81,58,288 as compound interest at the rate of 12% per annum. When you add your deposit amount of ₹28.80 lakh and the interest amount of ₹81,58,288, you will have a total of ₹1,10,38,288 in your account. This simply means that by the age of 50, you will become a crorepati.