Mutual Funds SIP: Nowadays, everyone wants high returns in a short period of time. Mutual fund SIPs can prove to be extremely useful for this. If you want to secure your future and build a large corpus over the long term, it’s crucial to have accurate investment information. How can an investor set their goals, how to create the right portfolio, and how to build a corpus worth crores through SIPs?
How to Start Investing
The first step in an investment journey is setting a goal. Without determining how much money will be needed in the future, it becomes difficult to understand the results of the investment. He said that if a person does an SIP of ₹12,000 for 15 years and assumes a conservative return of around 10 percent, the total amount would be around ₹45 to ₹50 lakh. However, if the goal is ₹1 crore, this amount will not be achieved. Therefore, it is crucial to determine the SIP or time period based on your goal.
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How to Achieve a Goal of ₹1 Crore
Experts believe that investors have two options to build a corpus of ₹1 crore. The first option is to increase their SIP amount to ₹23,000 to ₹25,000 per month. This will make it possible to achieve the ₹1 crore target within 15 years. The second option is that if an investor wishes to continue with a ₹12,000 SIP, the time period can be extended to 20 years. According to them, the true power of compounding is only evident when investments are continued over a long period.
The Most Important Mantra for Young Investors
Aditya Shah advised young investors not to try to time the market; rather, the more time they spend in the market, the better the results. If a person starts a SIP at the age of 25 to 30 and continues investing for 25 to 30 years, they can easily build a fund of ₹5 to ₹10 crore. He said that compounding is considered the eighth wonder of the world, and the more time it takes, the greater its impact.
What should a strong and balanced portfolio look like?
He advised limiting an investor’s portfolio to three funds. This includes a ₹2,000 SIP in Parag Parikh Flexi Cap, a ₹3,000 SIP in Bandhan Small Cap, and a ₹2,000 SIP in HDFC Midcap. He suggested that old funds can be held, but new SIPs should be made in these three schemes. It is also important to review the portfolio status every six to twelve months.
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Investors can add more funds
According to experts, if a long-term investor wants to add a new fund to their portfolio, Bandhan Small Cap or Nippon Small Cap in the small-cap category, and HDFC Midcap or Kotak Emerging Equity in the mid-cap category could be good options. However, they advised against frequent fund changes, saying that three to four good funds are enough to generate excellent returns over the long term.
Long-term investments can lead to a large corpus
Overall, proper planning, long-term investing, and the power of compounding can create a large corpus. If an investor starts investing early, increases their SIPs annually, focuses on a few good funds instead of spreading their investments across multiple funds, and allows time for their investments, building a retirement fund, children’s education, or a future fund worth crores becomes quite easy.