Can you save Rs 50 a day? Most would say, “yes”. Some would say, “easily”. How long would you take to reach Rs 1 crore (Rs 10,000,000) by saving Rs 50 a day? Well, back-of-the-envelope calculations would reveal that you need 546 years to do so. In other words, if Christopher Columbus, who was born in 1451, started to save Rs 50 at the age of 25, he would have been able to save Rs 1 crore in 2024.
The power of compounding
But now you have an instrument to achieve the same feat in 36 years. The magical wealth generator is called the Systematic Investment Plan or SIP in mutual funds. This is a tool that allows you to generate capital through disciplined regular investment.
Any online SIP calculator will tell you that investing Rs 50 a day – which is the same as Rs 1,500 a month – will fetch you Rs 1,09,97,762 (close to Rs 1.10 crore) at the end of the 36th year. In other words, if you start an SIP of Rs 1,500 a month at the age of 25, you would get this amount at the age of 61, or just after retirement.
Pick sound funds
The only assumption here is that the money that you would invest will generate an annual return of 12%, which is not at all difficult if you pick up one or two performing mutual funds. Any qualified investment advisor can guide you to pick them.
Very big corpus
Since mutual funds invest their pool of funds in equities to generate high returns, a higher return is also possible. A return of 13% will inflate your wealth to Rs 1,45,68,810 (Rs 1.45 crore) over the same period. In other words, with 13% return, you can reach the Rs 1 crore mark in the 34th year.
The rush in the country
The total money collected through SIP in July was Rs 23,332 crore. In June the amount was Rs 21,262.22 crore, while in the preceding month, it stood at Rs 20,904.37 crore – each month notching up a new record. The Rs 20,000 crore level was first breached in April when Rs 20,371.47 flowed in through SIPs.
(Disclaimer: This article is only meant to provide information. News9live.com does not recommend buying or selling shares or subscriptions of any IPO and Mutual Funds.)
There is a frenzy among Indians to seek financial freedom through systematic investment plans or SIP and it is not without reason. Ask any investment expert. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
