Systematic Investment Plan (SIP) allows investors to invest a fixed amount in a mutual fund scheme regularly. Many people didn’t know about it, but its popularity has increased in the past few years, and now, every wise person is ready to secure his/her future through SIPs. Let us tell you how you can make crores (millions) using SIP model.
How SIPs got recognition among individuals?
SIPs are getting famous from the last few years because of demonetization, and individuals unveiled the benefits of SIP and mutual funds. Though many investors were already familiar with the Systematic Investment Plans, still individuals found out more about it from Amfi’s Mutual Fund Sahi Hai campaign.
SIP is a tool that encourages investors/traders to invest consistently in a mutual fund scheme, and it also makes it possible for you to decrease or increase the investments in those schemes over time. It also discourages lump sum investment so that salaried traders can invest, too.
Why should you invest through SIPs?
We can give you some reasons for investing in mutual funds through SIP.
Firstly, it will bring financial stability and discipline in your life. Secondly, you can invest regardless of market index level, etc. Moreover, by using the SIP model, your investments will automatically invest in a scheme without doing anything.
How to make Crores using SIP model?
Mostly the returns on SIP equity mutual fund are in between the range of 12 to 18%, but let’s assume the average SIP returns in 20 years will be about 12% annually. As per the assumption, you will get 1.9 crores in 20 years by investing 20,000 per month. Isn’t it great to know that you will get returns in millions after spending just twenty thousand monthly? We are sure it is, but let us tell you how can this happen. Well, your actual investment in twenty years would be 20 years = (20,000 Rs) x (12) (investment per annum) x (20) (investment over a period) = 48 Lacs. The returns on your actual investment will give you 1.9 crore with a fixed amount of 20,000 per month, but you can even increase your investment every six months or annually as per your suitability.
Moreover, you can also create a portfolio of mutual funds by investing 20,000 monthly through SIP, but make sure to not have lots of them (only 2 to 4).
You can invest by choosing any of Large Caps Fund, Balanced Fund, Mid & Small Caps Fund, Multi-Cap Fund, and more. There will be plenty of combinations for you to invest your 20,000 per month, so pick wisely.