Even a two-year break from your Rs 1000 monthly SIP can cost you lakhs
Start investing in Systematic Investment Plan (SIP) today to earn 12-22% return at the time of maturity.
Investing to grow your money is a function of discipline. One has to develop the habit of saving money every month without fail.
The best way to maintain a discipline in savings or investment to create wealth is through Systematic Investment Plan (SIP) in mutual funds.
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.
The first rule of savings say 'start early'. It means the early you start, more returns you will get at the time of maturity. The more you procrastinate, the more you have to pay 'delay cost'. Which means less returns from more investment.
Here are three examples that will tell you how delay of cost impacts your finances:
For instance, if you invest Rs 1000 for the period of 10 years with expected rate of return at 17% per annum, your total investment is Rs 1,20,000. At the end of 10 years, you should get Rs 3,11,226.
However, delaying this Rs 1000 per month investment by five years will set back your money growth by more than 50%. Beginning to invest after five years at an expected rate of return of 17% will get you just Rs 93,581 at the time of maturity. Which means, Rs 2,17,645 is the cost of delay.
Further, if you dealy say by two more years or start investing after seven years, you will get just Rs 46,542 at the time of maturity. Which means, Rs 2,64,684 is your cost of delay.
The important point to note is that discipline is important in order to grow your money. Using your SIP money for other expenses once in a while will lead to a habit creation which will only heavily dent your wealth creation.
Therefore, keep investing and do not let any break in between.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.