Let you money work for You! Can you spare Rs.1,000 per month for yourself and see how it helps you build a corpus?

Let your money work for you!

Can you spare Rs.1,000 per month for yourself and see how it helps you build a corpus???

Investment through a Systematic Investment Plan is an excellent mode of regular saving. The amount can be as low as Rs.500 per month. Let’s first see a simple illustration on how it works:

Making my Money work for ME!

SIP for 10 Yrs

SIP for 15 Yrs

SIP for 20 Yrs

Monthly Investment

Rs.1,000

Rs.1,000

Rs.1,000

No. of Years of Investment

10 years

15 years

20 years

Interest on Investment

12% p.a.

12% p.a.

12% p.a.

Total Invested Amount

Rs.1,20,000

Rs.1,80,000

Rs.2,40,000

Fund Value

Rs.2,30,039

Rs.4,99,580

Rs.9,89,255

Absolute Return

92%

178%

312%

The figures above might look ambitious but it is a true picture. Of course, the calculation above is based on the assumption that the investment earns an interest of 12% per annum. The fact is, for an SIP investment in a fairly good equity diversified mutual fund scheme, certainly has the potential to generate this kind of return in the long term. One needs to have the patience and ignore the day-to-day rise and fall in the market.

In a nutshell, following are the benefits of investing in an equity diversified Mutual Fund Scheme through SIP:

ü Inculcates a regular saving habit

ü Helps to build a corpus without putting a onetime burden of a lump-sum investment

ü Staggered (Monthly) investment averages out the cost of per Unit purchase

ü Power of compounding helps earn better return

ü Profits, if realized, is tax-free for all the units held for 1 year or more

ü The fund is professionally managed by Fund Managers.

The best thing that I like about SIP is that we can link our investments directly through our bank account. As such, every month, our account is automatically debited by the amount we choose and we don’t even realize it.

And the mantra really works here:

If you don’t see it – you don’t spend it! – Start an SIP today – it’s never too late!!!

Hope you all like the post. Suggestions and comments will be appreciated.

Thanks!

Comments

Rohit said…
This is a very good idea AS LONG AS YOU DO NOT HAVE ANY DEBT.

In case of prior debt, it is ALWAYS advisable to pay off the debt first before even thinking about making any investing decisions.

Otherwise, the situation is akin to taking a loan to make investments - which is completely foolish (unless you're a Warren Buffet)
Gagan said…
@ Rohit: The truth is quite ot the contrary, when you take into account tax benefits of the loan. Ofcourse, it depends on the kind of loan you take. Education loan and home loan will help you increase your returns as post tax cost of funds is low. This, coupled with tax exception on investment in certain mutual funds will only increase overall returns. Only thing required is proper planning and little foresight. :)
Neha Nahata said…
ok! but didnt i ever tell u i was good at savin :P

Popular posts from this blog

What is Nestlé Waters Hiding?

Would Warren Buffett buy the iPhone 7? Probably not!!

More interest for your Savings Account