How to be a crorepati by SIP in 20 years? From Rs 10,000 p.m. in ELSS, earn over Rs 2 cr!
How to be a crorepati by SIP in 20 years? Yes, it can take a generation to turn into a crorepati and what is more, you will be rich without having taken crippling risk.
Undoubtedly, we are all having a very busy life. So much so that we have barely time to think of the best suitable investment for us. There is a wide range of investment tools like mutual funds, equities, fixed deposits and government schemes, etc., but where to invest is the real question. Each scheme varies from another by providing a whole different level of options when it comes to getting a hefty return on your hard earned money. Some prefer traditional form of investments like banks fixed deposits and government schemes, while some go beyond in taking risk with equities. But not all have the capacity to really think about a strategy leave alone wonder about what will happen next to your investment - whether you will earn big, or how much should you invest. The questions keep on racing in the mind, but many opportunities for investing to get big gains is lost due to paucity of time.
However, we save you the bother and provide an answer to get rich. Yes, there is a scheme, which gives even higher returns than the traditional ones, guarantees maximum returns, higher interest rates, lower lock-in period and can even overcome market volatility. It’s like every sort of delicacy piled on one plate for you!
This is an Equity-linked savings scheme (ELSS), which is not only a great tax saving instrument but also creates assured growth opportunity for your investment.
Guess what! The scheme is also promoted by government of India, which in itself provides a guarantee, and is targetted at bringing long-term investment for citizens.
As the name suggest, the majority of your ELSS funds are invested in equities or equities related products which helps you have market related higher returns.
There is also no age limit for investing in ELSS, hence anyone can begin saving at an early age with even a minimum amount of Rs 500 or Rs 1,000.
A maximum up to Rs 1.5 per year can be invested in ELSS.
There are two options for investment in ELSS namely dividend and growth fund. If you choose a dividend options, then you will be paid a fixed amount in installments during the lock-in period of 3 years, while on the other hand, if you choose growth fund then you will receive a lump-sum amount after the completion of lock-in period and till the date you want your investment to be in ELSS.
Apart from this, there are very low charges when it comes to saving in ELSS. They can be invested in the form of SIP which once again creates discipline, hassle-free and convenient way of investment. This means you do not have to worry about every month for investing in ELSS, just link your bank account with SIP and every month a lump sum amount will be deducted and added under ELSS.
Compared to other investment plans, ELSS has lower lock-in period which is up to 3 years. On the other hand, bank fixed deposits have 5-year lock in period, while Public Provident Fund (PPF) has 15 years, National Savings Certificate has 5 years and National Pension System (NPS) has till retirement.
Under section 80c of Income Tax Act, about Rs 1.5 lakh is exempted in investment under ELSS. Apart from that, there is also add-on benefit to the investors in regards to capital growth.
To invest in ELSS one can opt any nationalized or private banks for opening an account. Also remember to inform your banker about the tenure, amount of investment and type of investment.
There are quarterly options available for investing in ELSS, however, distributors suggest SIP method of making investment in this scheme, as SIP has more benefit, easy in understanding and provides higher returns compared to other investment.
Knowledge is key to success in any form of investment, hence, always have a brief understanding about your ELSS investment, be able to track, time, returns and your gains on multiple occasions.
Let’s understand why ELSS is better than other saving pools.
Firstly, always remember, the higher the tenure of your investment, the higher will be your earnings. Whether it be equities, or even other government schemes, the returns are generally higher when they are kept for long term.
In India, there are plethora of savings schemes to help you build your wealth, such as FD, PPF and NSC among few. However, the returns of these schemes are mostly taxed, but ELSS on the other hand has dual benefit - as its return are usually higher and only partially taxable.
According to ClearTax report, a 5-Year Bank Fixed Deposit gives you returns ranging from 6% to 7% with 5 year lock in period and is taxable.
Then there is PPF which gives higher return than FDs between 7% to 8% but has lock in period of 15 years. One good thing about PPF is the returns are not taxable.
Meanwhile, there is National Savings Certificate and NPS which give returns between 7% - 8% and 8% - 10%, with lock-in period of 5 years till retirement.
The returns on NSC is taxable, whereas NPS is partially taxable.
Compared to the above schemes, ELSS has capability to give guaranteed returns between 10% to 18%, and has lock-in period of 3 years with returns partially taxable. The returns can be even higher than 18% in many cases.
As per ClearTax, there are 6 funds which offer you best ELSS schemes.
If you are planning to invest in ELSS with Rs 500, Rs 1,000, Rs 5,000 or Rs 10,000 per month in the form SIP, this is what you need to know. Remember the longer period is best way to earn hefty gains even become crorepati and lakhpati, yes you have read it right that’s the potential of ELSS.
Let’s say, if you invested Rs 500 per month for 20 years and your ELSS returns is expected between 15% to 18% per annum.
Then you have invested a total Rs 1.20 lakh for 20 years, whereas you earnings would be in the range of Rs 7.48 lakh to maximum Rs 11.54 lakh.
Going ahead, if you chose to invest about Rs 1,000 per month for 20 years at interest returns between 15% to 18%.
Then you have invested about Rs 2.40 lakh for 20 years, and your earnings would be between Rs 14.97 lakh to maximum Rs 23.08 lakh.
If you have enough funds to invest about Rs 5,000 per month for 20 years at interest returns between 15% to 18%.
Then you have invested about Rs 12 lakh for 20 years, whereas you earn on your investment between Rs 74.86 lakh to a whopping Rs 1.15 crore.
Finally, if you have invested about Rs 10,000 per month in ELSS for 20 years with expected returns in the form of 15% to 18%.
Then you have invested a total Rs 24 lakh for 20 years, and are sitting on cash Rs 1.49 crore to Rs 2.31 crore by end of the tenure.
Considering the above, ELSS is surely one of the best schemes to make investment. The market is vast and volatile in next 20 years, it will be levels never imagined, which means your returns are even higher than Rs 2.31 crore.
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Hence, try to stay invested in ELSS for as long as you can, also remember not to invest money in one basket of sectors, be diversify take opportunity of little of every stocks. This will help your investment stay afloat and with guaranteed returns. Be bold and have an extensive knowledge of your investment, you can be your own expert while choosing investment in ELSS once known with all the corners of this scheme.
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