Have you ever imagined what it would be like to have Rs 50 lakhs at your disposal? It’s an impressive amount which can open up many opportunities. You could use it to buy a house, take a dream vacation, plan for retirement, enjoy your hobbies, or pay off debt. Such an amount could provide you with overall financial stability.
For most people, this hefty sum is just a distant dream. But with the right investment strategy, it can become a reality. How? By utilising the power of Systematic Investment Plans(SIPs) in mutual funds. With just Rs 10,000 invested monthly into mutual funds through SIPs, you can leverage the power of compounding and rupee-cost averaging and could be looking at Rs 50 lakh in the next few years! Let’s take a look at how this works.
Understanding SIPs
An SIP is an investment method or facility offered by mutual funds to give investors the flexibility to make regular investments instead of making a lump sum investment. You can choose the frequency of your investments – such as weekly, monthly, or quarterly as per your current financial standing and goals. This allows you to take advantage of rupee-cost averaging and asset diversification without having to risk your entire investment at once.
Using an SIP calculator to compare different plans to secure Rs 50 lakhs in returns
The first step towards achieving your goal of Rs 50 lakhs is finding the best mutual funds for your investment needs. To do this, you can use a mutual fund SIP calculator and determine the expected returns on your monthly investmentbased on the amount invested, expected return rate, and duration of your investment period.
You can then compare different investment plans offering varying interest rates. Based on the results, you can choose a plan and make a strategy that can help you reach the goal of Rs 50 lakhs much faster.
For example, if you choose to invest Rs 10,000 per month in a mutual fund with an expected annual return of 12%, it will take approximately 15 years for your investments to reach Rs 50 lakh. That means if youinvest in SIP mutual funds at the age of 30, you can build a corpus of Rs50 lakhs at the age of 45.
4 critical factors to consider when building a corpus of Rs50 lakhs with Rs 10,000 monthly SIP
- 1. Consistency is key: It is advisable to stick to your investments for the long term to reap the full benefit of the power of compounding and rupee-cost averaging, as they work effectively over the long term. This will also help you stay disciplined with your investments.
- 2. Automate your payments: To ensure that your SIP mutual fund investment remains consistent, you should set up auto payments so that money is automatically withdrawn from your bank account each month on the specified date and deposited into your chosen investments.
- 3. Choose your investments wisely: It’s important to select investments that match your financial goals and risk appetite, so consider factors such as expected returns, fees and charges, liquidity, and risk profile andcompare mutual funds carefully before deciding where to put your money.
- 4. Monitor your portfolio regularly: Do not make and forget your investments. Monitor them regularly to ensure they continue to meet your goals and expectations. Keep an eye out for any changes in market conditions or performance metrics which could affect the performance of your investments; if something doesn’t seem right, adjust your investments accordingly.
Closing thoughts
A monthly SIP of Rs 10,000 in mutual funds could be your ticket to financial security. The key is to start early, invest consistently with patience, and maintain financial discipline. You may stop an SIP once you reach one financial goal and use the funds to start a new SIP for other goals.
