You too can become crorepati! Just follow this simple SIP Mutual Funds trick
How to become rich or how to become crorepati in the long-term is most sought demand of the mutual fund investors.
How to become rich or how to become crorepati in the long-term is most sought demand of the mutual fund investors because, in the long-term perspective, the financial goals that are being met today in lakhs may spike in crores. So, one needs to convert its money from lakhs to crores. Therefore, for a mutual fund investor, becoming a crorepati by investing in thousands may look like a laughing stock but not for the mutual fund SIP step-up calculator. According to the tax and investment experts, one can enhance one's maturity amount to almost double by just enhancing one's SIP amount by 10 per cent per annum. They say that an earning individual can increase one's investment by 10 per cent as this much of hike in earning can be expected when he or she begins SIP.
Speaking on the type of mutual fund that can give better returns Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, "In an equity mutual fund one can expect at least 12 per cent returns in long-term. However, if the category is mid-cap or small-cap fund and the time period is beyond 15 years, then the return will be to the tune of 15 per cent for sure."
Therefore, if an investor decides to invest in mid-cap or small-cap fund while doing SIP, then assuming the 15 per cent returns that one can expect on his or her return, then his or her maturity amount without annual step-up would be Rs 60,02,682 if the investment is done for a period of 20 years. However, in the case of 10 per cent annual step-up, the maturity amount after the same period of 20 years would be Rs 1,12,95,999. So, 10 per cent annual step-up in next 18 years would help the investor enhance his or her SIP maturity amount by Rs 52,93,317 while one's investment in this period would go up by Rs 20,12, 850.
Speaking on the benefit of annual step-up in SIP Jhaveri said that initially, annual step-up of 10 per cent might look easier but after some times, when the SIP amount would go up, annual step-up of 10 per cent might not be easy because with the passe of time, one's financial expenditures grow many folds, especially when its kids grow young. So, annual step-up beyond 10 pe cent is not advisable and one should invest one's money keeping its investment goal, not the returns only.