The popularity of mutual fund investments has increased rapidly in the last few years. This option has become especially popular for investors who want to save a limited amount every month and build a substantial fund for the future. Nowadays, it’s not necessary to have a large sum of money to invest. Regular and disciplined investing can also build a good fund.
If a person invests just Rs. 2,000 every month and continues this for a long time, this amount can become a strong financial support over time. This is why SIPs are becoming the preferred choice for small investors today.
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Build a fund worth Rs. 4.65 lakh by investing Rs. 2,000 in a SIP
Systematic Investment Plan (SIP) is a simple and systematic investment method. In this, the investor invests a fixed amount every month. If an individual invests ₹2,000 per month in a SIP and continues this investment for 10 years, the total investment is ₹240,000.
If an average annual return of 12 percent is achieved, this amount can reach approximately ₹4.65 lakh after 10 years. This means that the investor can earn an additional profit of approximately ₹2.25 lakh. However, the actual return depends on market conditions.
Types of Mutual Funds
Mutual funds are primarily divided into equity funds, hybrid funds, and debt funds. Each fund has different risks and returns. Equity funds carry higher risks but can also provide higher returns in the long run. Hybrid funds contain a mix of both equity and debt. Debt funds are considered relatively stable.
Debt mutual funds invest investors’ money in government bonds, corporate bonds, and other fixed-income securities. These funds are less volatile than the stock market. When investors invest in debt funds, it’s essentially a direct loan to the government or companies.
Upon maturity, these investments earn the investor their principal amount plus fixed interest. This makes them a relatively safe investment option.
Debt mutual funds may be suitable for investors who are risk-averse and seek stable returns. They may also be a good option for those who want slightly better returns than fixed deposits but want to avoid the high volatility of the stock market. Choosing the right investment always depends on the investor’s income, goals, and risk appetite.
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What to consider before starting an investment
Before investing, it’s important to understand the fund’s performance, expense ratio, and investment horizon. Maintaining the investment for a longer period of time can yield better results. Consulting a financial advisor may also be beneficial.
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Rohit P
My name is Rohit Pal, and I have been working in the field of journalism for the past five years. During this time, I have written on a variety of topics, including business, automobiles, technology, and politics. I have worked with several major organizations and am currently working with Timesbull.
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