If you want to make a fund of Rs 10 crore for retirement, then the most important thing is to invest at the right time and regularly. One such good way is Systematic Investment Plan of Mutual Fund i.e. SIP.
SIP’s amazing small amount, big dream
The biggest feature of SIP is that you can start it with a very small amount. Nowadays it is also possible to start with just 250 rupees. But if your target is to raise Rs 10 crore till retirement, then for this you will have to invest a little fine from the beginning. If age is low, you can keep the beginning small, but gradually it is necessary to increase the amount. SIP not only makes investment habit, but also helps to add a lot of money in the long term.
Always remember three things while investing in SIP
- start early: The sooner you start investing, the more you will get the benefit of compounding.
- Invest for a long time: Keep a perspective of at least 1520 years.
- Increase money every year: Every year, increase the SIP amount by 510%.
Magic of compounding
The great scientist Albert Einstein called the compounding the eighth wonder of the world. When you invest your earnings again, your money starts earning more money. The same is amazing in SIP. Regular investment and long time together give tremendous advantage of compounding.
Fund of Rs 10 crore
According to a report by FundsIndia, if you consider 12% compound returns annually, then SIP will have to be done in this way to make a retirement fund of Rs 10 crore. If you start early, then a big fund can be made than a very small amount. For example, if you start SIP at the age of 25, then the SIP of about Rs 14,600 is enough every month. But if you start at the age of 40, then to get the same target, you have to do SIP of about Rs 91,500 every month.
Keep some things in mind while investing in SIP
- Do not be afraid of market fluctuations: The purpose of SIP is that you keep investing every month, this keeps the average purchasing price decreasing.
- Separate SIP for different goals: Retirement, children’s education, buying homes. Keep separate SIPs for each goal.
- Choose step-up sip: Keep increasing your SIP amount to 10% every year, this will keep your investment increasing as your income increases.
Starting early is the real strength
A retirement fund of Rs 10 crore may be a dream, but if you invest regularly and discipline through SIP then this dream can also become a reality. The magic of compounding works only when you give him time. So start investing as soon as possible and continue it for a long time.