SIP Investment Plan: In today’s era of inflation, every person thinks about how to create a big fund even with low income. If you are also asking this question whether one can become a millionaire by investing Rs 1000 a month, then the answer is yes. In modern times, SIP i.e. Systematic Investment Plan has become such a means through which even common people are gradually creating their own big fund.
What is SIP and why is it beneficial
SIP means Systematic Investment Plan, in which you invest a fixed amount in mutual funds every month. This is the simplest and most effective way of investing as you can start with just Rs 500 or even Rs 1000. Its biggest feature is that the market fluctuations get balanced in the long term.
The best thing about SIP is that it gives the benefit of compounding, which increases your returns manifold. Apart from this, by investing in ELSS funds, you can also save tax under Section 80C. It is easy to invest a small amount every month and it does not affect your financial condition much.
How to make a crore fund from a SIP of Rs 1000
If you do a SIP of Rs 1000 every month and continue it for 36 years, the results will surprise you. Your total investment in this period will be only Rs 4.32 lakh, because this amount is made in 36 years at the rate of Rs 12,000 per year.
But through the magic of compounding, this small amount turns into crores. If the average return is 14 percent, then after 36 years you will get a profit of about Rs 97.74 lakh. In this way, your total maturity amount will be more than Rs 1.02 crore. This calculation shows how even a small amount can become a big fund with patience and regular investment.
Power of compounding and long term benefits
The secret of SIP’s success lies in compounding, which is also called interest on interest. The longer the period you invest, the more the effect of compounding is visible. In the initial years you feel that the fund is growing slowly, but after 15-20 years you start feeling its speed.
If you get a return of 16, 18 or 22 percent in a year, which is possible in the long term, then your amount can become Rs 2 crore or even more. That is why financial experts always say that time is the most important factor in investing.
Simple process to start SIP
Starting a SIP is very easy. You have to go to a good mutual fund app or website and complete your KYC. Aadhar card and PAN card are required for this. After that you have to choose a good equity fund which performs well in the long term.
You can start this journey by saving just Rs 33 per day i.e. Rs 1000 per month. The most important thing is that you have to be patient and continue investing regularly. By choosing the right fund and investing for a long period, you can definitely become financially independent.
Disclaimer : This article is based on general information and calculations. Mutual fund investments are subject to market risks. Before investing, consult a qualified financial advisor and read all the terms and conditions of the fund carefully.
