If you want to create big capital for the future, the most important thing is regular investment, patience and discipline. Many people while investing in mutual funds think about which fund is the best or when to invest in the market. But experts believe that the biggest secret of long-term success is not right timing but continuous investment. 10-10-10 SIP Russia is based on this thinking. This is a simple investment strategy, which can help in building good wealth in the long run.
What is 10-10-10 SIP Rule?
This rule includes three simple things. Continue SIP for at least 10 years. While planning, expect an average annual return of 10%. Increase your SIP amount by 10% every year. That is, if your income increases, keep increasing your SIP gradually along with it.
How does this rule work?
Suppose you start a SIP of Rs 10,000 per month today. Deposit ₹ 10,000 every month for the first year. Deposit ₹ 11,000 per month in the second year and ₹ 12,100 per month in the third year. Similarly, deposit ₹ 13,310 per month in the fourth year. That means, every year SIP has to be increased only by 10%. This increase may seem small at first, but over time this extra investment makes a big difference in your net worth.
How much can be the benefit?
According to experts, if a person does a SIP of Rs 10,000 every month for 10 years and gets an average annual return of 10%, then he can have a corpus of around Rs 20.48 lakh. But if the same investor increases his SIP by 10% every year, then after 10 years his fund can reach around Rs 30.45 lakh. This means that just by increasing SIP every year, an extra fund of about Rs 10 lakh can be created. However, this is only an example. The returns of mutual funds depend on the market and are not guaranteed.
What is compounding?
Compounding means that you get returns not only on your investment but also on the returns already received. This is why the longer you stay invested, the faster your wealth can grow.
The biggest advantage of 10-10-10 rule
The biggest advantage of this rule is that the investor pays attention to those things which are under his control. Regular investment, increasing investment every year and continuing investment for a long time. It is almost impossible to predict correctly when the market will go up and when it will come down. But with regular investment and patience, a good fund can be created in the long run. If your salary increases every year, then it becomes easy to increase SIP in the same proportion. This can help in achieving major future financial goals like buying a house, children’s education or retirement planning.
Disclaimer: 10-10-10 SIP Rule does not guarantee that you will get only 10% returns every year. This is just a way of planning. Mutual funds are subject to market risks. Therefore, before investing, understand your risk appetite and financial needs.
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