How a 10% rise in your SIP of Rs 5000 per month can help you achieve Rs 1 crore goal even with lower returns
Investing in Systematic Investment Plans (SIPs) can help you in giving high returns with marginally increase in investment amount every year.
Making our money grow through investments like mutual funds and systematic investment plans (SIPs) are a good way to begin but are deeply dependent on the performance of stock markets.
Giving out huge amount towards investment at the early stage of earning is tough because the income is less too. But, the amount can be increased with the rise in income. Which means, if you are starting with Rs 500 per month in one year, this amount should rise by 10% every year to Rs 550 per month.
This is how it works.
For instance, you enter into SIP for an amount of Rs 5000 per month and for the time period of 20 years. Your total investment amount comes to Rs 12 lakh (Rs 5000* 240 months).
Considering rate of return at 15%, at the time of maturity, you will get Rs 75,79,775. This means, your earning on investment is Rs 63,79,775.
However, look at another situation. What if you increase the investment amount by just 10% every year.
When you are putting Rs 5000 per month in SIP, you increase it to Rs 5500 per month from next year. Which means, for that year, your investment will be Rs 66,000 (5500* 12 months). So your total amount for two years will be Rs 1,26,000 (Rs 60,000 in first year + Rs 66,000 in second year).
Like this way, if you keep on increasing the investment amount by 10% every year for 20 years, your total amount into SIP will be Rs 23,40,000.
Keeping the rate of return same at 15%, at the time of maturity, your returns will be Rs 1,14,84,899 (Rs 1.14 crore approx). Your earning on investment will be Rs 91,44,899.
Hence, with the minor increase in investment, can make give you crores!
Disclaimer: This story is for informational purposes only and should not be taken as an investment advice.