In today’s time, everyone wants to save money, but most people feel that it is difficult to create a big fund without making big investments. The truth is that good wealth can be created even with small amounts, all that is needed is proper planning and patience. SIP i.e. Systematic Investment Plan in mutual funds makes this task easier.
If you invest just Rs 2000 every month and continue it for a long time, the magic of compounding gradually increases your money. The longer the time period, the faster the returns will increase.
How will your investments be in 10 years?
Suppose you start a SIP of Rs 2000 and continue it for 10 years. Your total investment during this period will be Rs 2.4 lakh. If an average annual return is 10%, then this amount can be more than Rs 4 lakh. At 12% return it can reach around Rs 4.5 lakh, whereas at 15% return it can reach around Rs 5.5 lakh. This means that your money can increase significantly in just 10 years.
The real effect will be visible in 20 years
If you continue this SIP for 20 years, the total investment will be Rs 4.8 lakh. But due to compounding this amount increases manifold. At 10% return it can become around Rs 15 lakh. If you get 12% return, it can reach around Rs 20 lakh. At 15% return, this can become a fund of around Rs 30 lakh. The power of time is clearly visible here.
Big fund can be created in 30 years
If you remain patient and continue investing for 30 years, the results can be even more surprising. The total investment will be Rs 7.2 lakh, but at 10% return it can reach around Rs 45 lakh. At 12% it can be around Rs 70 lakh and at 15% it can be around Rs 1.4 crore. That means even a small SIP can bring you close to crores.
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