Nowadays SIP (Systematic Investment Plan) has become a great way to invest in mutual funds. In SIP, you invest a small amount every month, which increases over time and you get a good return on your investment. If you also want to invest in mutual funds, then SIP can prove to be a great option.
What is SIP and how does it work?
SIP means 'Systematic Investment Plan' i.e. regular investment plan. In this, you invest a fixed amount in mutual funds every month. The biggest advantage of SIP is that you can start investing even with small amounts, which can take a bigger form over time. In this process, you do not need to invest again and again, but every month a fixed amount is automatically deducted from your bank account and goes to the mutual fund.
What if you invest ₹3000 every month in SIP?
Now if you invest ₹3000 every month, how will your investment grow after 10 years? For example, if you invest in a mutual fund through SIP and it gives an average annual return of 12%, then your total investment in 10 years will be ₹3,60,000. At the same time, the return on this investment will be around ₹3,37,017. That is, after 10 years you will get ₹6,97,017. Out of this, ₹3,60,000 will be your original investment amount, while ₹3,37,017 will be available as return.
Benefits of SIP
Big advantage over regular investment: The biggest advantage of investing in SIP is that you can start with small investments and make big money over time. This method reduces financial pressure as you do not need to invest a large amount at once.
Market fluctuations: While investing in SIP, you may face market fluctuations, but in the long term it balances out the returns and makes them better. This means that even if the market falls, SIP helps your investment grow in the right direction over time.
Convenient and easy: The best thing about SIP is that you can set it up as per your convenience and get a fixed amount deducted from your account every month and put it in the mutual fund. This process is completely automated, so you do not have to think again and again.
Better returns in the long run: By investing in SIP, you get good returns over time. Returns of mutual funds improve over time, especially when you invest for a long time.
If you invest in mutual funds, then the time period of 10 years is very important. Investing for a long time can give you a good return on your money. This is because the returns of mutual funds are stable over time but also increase. Also, while investing in SIP, you have to face the fluctuations of the market, but in the long run these fluctuations stabilize your returns. A period of 10 years provides a good opportunity, which can make the return on your investment even better.
Keep these things in mind while investing through SIP:
Selection of Mutual Fund: It is very important to choose the right mutual fund. Choosing well-performing funds can give you better returns.
Investment amount: Always invest according to your capacity. You can start investing in SIP with as little as ₹ 500.
Long term investment: You should invest in SIP for a long period, so that you can avoid market fluctuations and get good returns.
Regular investment and discipline: You will get the benefit of SIP only if you invest regularly. The longer you invest, the higher the returns you can get.
