SIP Calculation: There are many ways to invest in mutual funds, but SIP, or Systematic Investment Plan, is considered the easiest and most disciplined method. Through SIP, investors invest a fixed amount every month, gradually building a large fund. This is why SIPs have become increasingly popular among salaried individuals and middle-income groups.
Build lakhs with a monthly SIP of Rs. 3000
If a person starts a SIP of Rs. 3000 every month and receives an average annual return of 12 percent, their investment can reach approximately Rs. 50 lakhs in about 24 years. The total investment amount over this period would be approximately Rs. 8.64 lakhs, while the remaining amount is generated through compounding returns. This means that in the long term, the investor can get many times more profit than their principal investment. However, this return is dependent on market performance and subject to fluctuations.
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Time plays a crucial role in SIPs
The biggest advantage of SIPs is that the impact of market fluctuations is averaged out over time. But patience is extremely important for this. Many investors consider SIPs as short-term schemes and stop investing if they don’t get the expected returns in a few months or a year. Mutual funds actually deliver better results in the long term.
Seeking quick profits leads to losses
Nowadays, people want quick returns. When a SIP doesn’t show significant profits immediately, it leads to disappointment. Because of this mindset, many investors abandon even good schemes midway, while the real benefit of compounding becomes visible only after many years.
The impact of rising expenses and poor planning
Sometimes, investors initially invest more than their income in SIPs. After some time, when responsibilities and expenses increase, the SIP becomes a burden and has to be stopped. The right approach is to invest according to your income and maintain a balance between needs and savings.
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Panic due to market downturns
When the stock market falls, it is natural for investors to feel anxious. However, this period is considered the most beneficial for SIP investors because they get more units at lower prices. Despite this, due to a lack of information, people stop their SIPs during market downturns, which can negatively impact their future returns.