SIP Calculator: Today, the common man does not want to depend only on savings, but he wants to get better returns from his money. This is the reason why the popularity of mutual fund investment is increasing rapidly across the country. The latest data from the Association of Mutual Funds in India (AMFI) shows that not only is the number of mutual fund accounts increasing in the country, but the amount of investment in them is also constantly making records.
Why is SIP the best way to invest
There are many options to invest in mutual funds, but the Systematic Investment Plan (SIP) is considered to be the easiest and disciplined way. In this, the investor deposits a fixed amount every month, which gradually creates a big fund. The biggest feature of SIP is the advantage of compounding. The longer the investment time, the bigger the return.
Mathematics of risk and return
Mutual funds are indeed linked to the stock market, and there are fluctuations in it. Sometimes your portfolio grows rapidly, and sometimes it may decline. But by investing in the long term, this risk gets balanced, and due to compounding, huge profits are obtained.
Understand the impact of tax, too
Capital gains tax also has to be paid on the profit from the SIP. Therefore, the investor should always keep in mind that the tax will affect their final fund. If the goal is big, then the investment period may have to be extended a bit.
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How much funding will be created in 12 years?
If an investor does a SIP of Rs 10,000 every month and gets an average annual return of 12 percent, then after 12 years, he will have a fund of about Rs 30.80 lakh. During this time, the investor would have invested a total of Rs 14.40 lakh, while he would get about Rs 16.40 lakh as a return.
On the other hand, if the average return is 15 percent annually, then after 12 years, this fund can grow to about Rs 37.56 lakh. The amount invested in this would be Rs 14.40 lakh, and the return would be more than Rs 23 lakh.