Can someone who can set aside only a small amount of money a month dream big? It can be said that dreams will take wings if you start investing in mutual funds through SIP. Through SIP, investors invest a fixed amount into a mutual fund scheme at fixed intervals. SIP is an investment method similar to Recurring Deposit in Bank.


The biggest advantage of SIP is the options for the investor. The investor can decide how much to invest and the intervals for investing. SIP can be done weekly, monthly and quarterly. Setting up the SIP according to the salary date will help the investment to continue uninterrupted.

You can start your SIP investment from a small amount. Depending on the funds, SIP can be started from Rs.500. Let's see how much savings can grow when you invest Rs 1000 through SIP in a monthly period.

SIP can generate huge savings by investing a small amount of money. Period is the key factor here. According to a Funds India report, if a person invests Rs 1,000 monthly through SIP and earns 12 per cent return, the investment will grow to Rs 34.9 lakh in 30 years. 360 months over 30 years through SIP is just Rs 3.6 lakhs.

Shortening the tenure also reduces the savings. A person who invests Rs 1,000 per month through SIP for 20 years and earns 12 per cent return will have a portfolio value of Rs 9.89 lakh. 2.40 lakhs is invested during this period. A SIP of Rs 1000 for 10 years can earn Rs 2,30,038 from an investment of Rs 1.20 lakh.

Benefit of SIP


 Compounding is what really sets SIPs apart. SIP investment in Mutual Funds can generate profits over and above the monthly invested amount. This is why even small investments can grow in the long run by investing regularly through SIP. A SIP setup can be used to gradually increase the monthly deposit over time while investing through SIP. This will help shift more money into investment as income rises.

Where to invest


 The main challenge is which fund to choose before investing through SIP. It is difficult for beginners to find the right one among the many mutual funds. Depending on the risk profile one can invest in large cap, mid cap and small cap funds. Along with this, there are different levels of mutual fund schemes like index fund, balanced fund and sectoral fund. Funds can be chosen by considering the risk and investment period of each one.

notice


 The above article is for study purpose. Before taking investment decisions in this regard, the advice of a financial expert can be sought. Investment in mutual fund is subject to risk of loss. Take investment decision at your own risk only. Granium Information Technologies and the author are not responsible for any profit or loss that may occur based on the decision taken after reading the article.