Mutual Fund SIP: Systematic Investment Plan or SIP is a financial plan that provides investors an opportunity to invest in a careful and informed manner. In this, investors invest small amounts instead of lump sum investment. Invest in mutual funds through SIP. Mutual fund SIP helps investors achieve their financial goals. ThisOne also gets the benefit of compounding on the amount invested regularly. It has the facility of liquidity. This is a better investment option for those who have low income or who want to invest regularly on monthly, quarterly or yearly basis. What is Mutual Fund SIP? And through this, how a SIP of thousand rupees can convert funds into crores. Today we will understand about this.
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What is SIP in mutual fund?
One way to invest in SIP mutual funds easy and sensible The method in which people select a fixed fund scheme and invest small amounts from time to time. The specialty of this system is that it allows regular investments to improve the financial position, thereby maintaining the possibility of high returns. Mutual funds are a very simple way of investing. You can achieve your financial goals by investing in it at regular intervals.
By investing regularly in Systematic Investment Plan (SIP), you can take advantage of the power of compounding and increase your returns. This investment option helps you meet financial goals like retirement, education or buying a home.
Benefits of Mutual Fund SIP
Investing through SIP gives you the opportunity to avoid market volatility or fluctuations as it is constantly subject to changing market conditions in regular investments. This maintains stability in your financial situation and helps towards sensitivity. The amount invested in SIP is invested in different asset classes, which reduces the risk. In this you get many benefits like liquidity facility, tax benefits.
SSIP promotes the habit of investing regularly. It involves investing for a long period of time, which helps in raising larger funds and meeting financial goals. In SIP, investors can raise big funds by starting investment with small amount regularly.
Let us now understand how an investor can raise funds worth crores by investing just Rs 1000 every month.
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Create a fund of more than Rs 3 crore with monthly SIP of Rs 1000
Suppose if an investor, at the age of 20, withdraws only Rs 1000 from his savings and starts doing mutual fund SIP every month. He estimated the expected return on this to be 12 percent to 15 percent annually. Every year he invested Rs 12000 in SIP. He continued his investments in this manner till retirement i.e. till the age of 60 years. In this way the total period of his investment was 40 years. At the age of 60, his total investment through mutual fund SIP was Rs 48,0000. He got returns at the rate of 12 percent per annum, so after 40 years the value of his investment became more than Rs 1 crore. Whereas if the return on mutual fund SIP is 15 percent per annum, then after 40 years the value of investment becomes more than Rs 3 crore.
Monthly SIP: 1000 rupees
Investment Period: 40 years
Estimated Returns: 12 percent annually
Total investment amount in 40 years: Rs 4,80,000
Total value of SIP after 60 years: Rs 1.18 crore
Benefit of interest: Rs 1.14 crore
Same investment amount if expected return: 15% per annum, then
Total value of SIP after 60 years: About Rs 3.14 crore
Benefit of interest: about 3.09 crore rupees
,Note : The help of SIP digital calculator has been taken in the calculation.)
Keep in mind that the longer you keep your investment for a longer period, the more you will get the benefit of compounding.
(Note: We have given information here based on the performance of a mutual fund scheme. This is not investment advice. There are risks in the market, so consult a financial advisor before investing.)
