Mutual Fund investment: The SIP calculator actually offers one to peep into the future. The asset it can build over time is impossible to fathom in the beginning.
Start investing in mutual funds through the SIP route before you turn 20 and see the magic unfold. (Picture Credit: Freepik)
But for the SIP calculator, it would have been quite impossible for the common man to gauge the actual potential of compounding. To know the power of small amounts using the SIP calculator in mutual funds, read on.
Mutual Fund investment: Start early
But before launching into the calculation, one has to remember that the power of any amount of SIP is maximised by prolonging the time of investment. The more the period, the bigger the amount accumulated.
Say a young person starts investing as soon as he/she becomes an adult. And the mode of SIP payment is monthly, which means a sum of Rs 1000, is invested in one or two selected funds every month.
SIP calculator Rs 1,000 per month
Let’s assume the investment is continued uninterrupted for at least 20 years. Also, let us assume that a 12% return – moderate by mutual fund standards – will be obtained. In this case, the investor would get back a total amount of Rs 10 lakh when he/she turns 38.
Rs 1,000 over 30 years
Let’s see if the investment is continued for another 10 years ie. for 30 years. If he/she has the determination to do so, the SIP would fetch him/her Rs 35.3 lakh – all by putting in merely Rs 1,000 every month systematically.
SIP for anyone
The beauty of this entire strategy is, the amount of investment is so small that almost anyone can afford it keeping his/her expenditure pattern intact. Most important, those with a meagre income or college students can begin it with their pocket money. The investment journey can be launched even when one does not start earning.
It is quite possible for a young adult not to spend all the money one gets as gifts on occasions like birthday etc and channelise in it such investments. It would only keep building wealth over the years.
The other point to keep in mind is, one should not feel tempted to sell mutual fund units
SIP revolution
Right now, a SIP revolution is sweeping through India. The amount of money put Indian investors put into SIPs has risen from about Rs 20,300 crore in April to Rs 20,900 crore in May and then to Rs 21,260 crore.
While 49.74 lakh new SIPs were registered in May alone, the number has soared to 55.12 lakh in June – a rise of 10.81%.
So invest in one or two carefully selected funds and set on your journey. But you must speak to a qualified financial advisor before investing.
(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.)