You can prepare a larger fund from small investment through SIP.
Inflation is increasing rapidly in today’s era. In such a situation, if you do not add money for the future, then there can be difficulties in the future. But if you invest a fixed amount every month with a little wisdom, then you can make a big fund comfortably. The easiest and effective way of this is to invest in mutual funds through SIP,
SIP i.e. Systematic Investment Plan is a way in which you can invest a certain amount in mutual funds every month. This method is very good for those who cannot invest a large amount at once, but want to add money slowly.
How will the fund of ₹ 50 lakh be made from SIP?
Suppose you put ₹ 10,000 in SIP every month and if you get a return of 12% every year, then your total deposits will become about 50,45,760 rupees in 15 years. This means that you can make a fund of over 50 lakhs by investing just ₹ 18 lakh (₹ 10,000 × 12 months × 15 years).
Magic of compounding
The biggest advantage of SIP is compounding, that is, you not only get returns on your investment, but also get the next return on that return. This is the reason why the longer you invest, the more benefit you invest. If you invest correctly by saving a little amount every month, then you can do many big things easily, such as taking your home, adding money for children’s education or retirement.
If you start SIP at the age of 25 or 30, then you will get the benefit of long periods and you will be able to prepare the fund quickly. By starting investing early, you can prepare a big fund even at a low amount. Whereas if you start after the age of 40, then you will have to invest more to achieve the same goal.