If we tell you that you can earn ₹10 lakh by investing just ₹2,000 every month, you might think it’s a joke. But this is possible through a Systematic Investment Plan (SIP). Let us explain how you can become a lakhpati with such a small amount. We will also tell you what SIP is and how it works.
What is a Systematic Investment Plan (SIP)
SIP is a plan where you invest a fixed amount of money every month. This amount can be one thousand rupees or more. You can choose how often you want to invest, like every month, every three months, or once a year. But the money is always invested on a fixed date.
SIP helps you grow your money slowly over time. The best part of SIP is that you earn compound interest. This means you get interest on your investment and also on the interest already earned.
How SIP Works
When you invest money in SIP, the fund manager puts your money into a mutual fund. For example, if you invest one thousand rupees and the price of one mutual fund unit is twenty rupees, then you will get fifty units. When the price of these units goes up, the value of your money also increases. This is how your returns grow with time.
How to Make Ten Lakh Rupees from a SIP of Two Thousand Rupees
Now, let us understand how you can make ten lakh rupees by investing just two thousand rupees every month. If you get an average return of twelve percent per year, then you will have ten lakh rupees in about fifteen to sixteen years.
In this case, your total investment will be around three lakh sixty thousand rupees. The interest you earn will be about six lakh forty-nine thousand rupees. In the end, you will get more than ten lakh rupees.
If your return is higher, you will reach the goal faster. If you increase the amount of SIP and invest regularly, you can earn more money in fewer years.