Mutual Fund SIP Rs 10,000 a month for 20 years may return up to Rs 1 crore
Rupees ten thousand per month investment in Mutual Fund SIP for a span of twenty years may touch up to rupees one crore.
Mutual Fund SIP: People who are into investment are opening their eyes to the importance of saving money for the coming years with the help of the Systematic Investment Plan
Mutual Fund Systematic Investment Plan: Details
People who are into investment are opening their eyes to the importance of saving money for the coming years with the help of the Systematic Investment Plan. Mutual Fund SIP is an effective plan for saving and investing in a systematic manner in specific time durations, which could be either day to day or weekly or monthly. When a SIP in mutual funds is started, you give the authority to the fund house to operate on the basis of automatic deduction of the SIP amount from your bank account and that is how investment in the chosen fund at the chosen date is made.
Why choose SIP?
Money experts have the belief that the biggest benefit of Mutual Fund SIP is that it helps in saving and investing money through a systematic and regular viewpoint.
Anurag Garg, CEO and Founder, Nivesh.com, advises that one should reflect on the long term when starting SIPs.
For instance, Gupta said to FE Online, that a month to month Systematic Investment Plan(SIP) of rupees ten thousand for a duration of fifteen years (given a return of twelve per cent per annum) will amount to a total of rupees fifty lakh and the same money will reach nearly rupees one crore in 20 years.
Gupta also added that there is a false belief about the positive relationship between SIPs and equity funds.
SIPs also help in taking benefit from the wide fluctuations as units are invested at different price points and the cost decreases on average over a duration of time that leads to significant returns in the long run as said by Gupta.
Significance of Mutual Fund SIP for mid-class
For middle-class businessmen, it is key to save and build money, which is aside from their main work. Going along with the fact that the situation in the environment has become uncertain and ever-changing.
Gupta also mentioned that there is a likelihood among businessmen to reinvest their surpluses into the business, which is not considered a great strategy in present times. They ought to put money into surpluses in various other investment plan options.
He said that they suggested one of their corporate clients start SIP from their business profits because they had good capital. This could be structured in such a way so that they could set aside money from the business systematically each month and create a decent bulk, which in turn could be utilised for fresh business extension or could be of use in emergency circumstances like these times. They were content with the way it turned out and have since increased the Mutual Fund SIP. However, they are open to taking out money every now and then, whenever in need.
Last but not the least, Gupta implied that one needs to make sure that SIPs are done in debt or hybrid funds rather than aggressive funds, as the money could be needed at any time. The businessmen can also go with the combination of debt and equity, which result in altogether higher and tax structured returns.