Many people think that in order to prepare a large fund from investment in SIP, investment of large amount is necessary every month. However, in the equity scheme of mutual funds, a large fund can also be prepared from the sip of small amount. Power of compounding is the reason for this. Many people also call it Magic of Compounding. If you do not have much money for investment every month, then you can also start a low amount sip.
You can prepare a fund of Rs 2 lakh every month with an investment of just Rs 1000. It estimates 12 per cent returns annually. Due to compounding, the return on your money increases every month, because you start getting returns on returns. Its magic of compounding is called. If you invest Rs 1000 every month for 4 years, then you will invest a total of Rs 48,000. Your investment will increase to Rs 61,015 during this period with 12 per cent annual return. This means that you will get a return of Rs 13,015 on your investment, which is not bad for a short period of 4 years.
If you want to make a fund of Rs 2 lakh through SIP, then you will have to invest 1,000 rupees for only 10 years. You will invest a total of Rs 1,20,000 in 10 years. With 12 per cent annual return on this, you will get a total return of Rs 1,04,036 as a return. In this way, an investment of just Rs 1,000 every month will prepare a fund of Rs 2,24,036 for you in 10 years. It is necessary to keep in mind that the return of mutual funds depends on the performance of the stock market. Therefore the return may remain slightly less or more.
Experts say that if you also invest a low amount every month through SIP, then a large fund can be prepared in the long term. If you cannot invest much, you can invest as much as you have the ability every month. With this, you can raise good funds for education of children and your retirement. Your investment will help the power of compounding. You just have to focus on investment regularly.
The sooner you start investing, the more time you will get to increase your money. Initially, money increases gradually. But later the speed of his growth increases. Experts say that the income of a person usually increases every year. Especially the salary of the job people increases every year due to the increment. You can increase your sip amount every year when salary increases. This will prepare a very good fund in the long term.