Want to save for short term goals? Rs 5000 a month in SIP can help you
In a SIP, an investor has to set aside small amounts of money either monthly or quarterly and the amount of investment can be as low as Rs 500.
Once you start earning, the list of expenditures keep on increasing as the time passes. From taking loan for higher education to saving money for retirement, expenses are never ending.
While you are thinking about long term goals, at the same time it is important for you to save money for short term goals. Short term expenses could be your wedding or planning a lavish honeymoon or buying your first car.
A person generally starts earning at the age of 22 years and marries at the age of 27-28 years. Which means around five years of time to save money.
Here comes Systematic Investment Plans (SIPs) into picture.
In a SIP, an investor put aside a certain amount which could be as low as Rs 500 either monthly or quarterly.
For instance, if you invest in SIP say around Rs 5000 per month for the period of five years where expected rate of return is 20%, then at the time of maturity, you will get back 5,08,791.
Which means, Rs 3,00,000 will be your investment amount and Rs 2,08,791 is your earning on investment. This amount is sufficient for you to meet your short term goals.
So, if you have started earning, park your money in SIP to earn 15-22% of returns. The delay in investment can restrict your returns.
Disclaimer: This story is for informational purposes only and should not be taken as an investment advice.