What is SIP investment and why SIP is the best way to invest?
SIP investment allows you to invest in mutual funds through installments on monthly basis
Sometimes we wish we had a convertible, a duplex on the 20th floor or we could spend a weekend, travelling the corners of the world with family. But somehow in the rush of life we let go of those desires and end up owning a hatchback, a 2BHK in an economic housing complex and a hard-earned trip to goa. The question is why does it happen? The answer is lack of financial education at an early age. To survive and make money in this fast moving, ever changing world what we need the most is financial education and learn the art of making money.
“The poor and the middle class work for money; the rich make
money work for them.” – Robert T. Kiyosaki
There is basically 1 lesson to learn and that is “The art of investing”. The central idea of this is very simple, start early and invest regularly. But the question is 1. How to invest regularly, when the market is so unpredictable? What if I lose whatever I have saved so far? And 2. how early is early enough?
Firstly, yes it’s true that the market is unpredictable and no astrologer can tell you whether the price of a particular share is going to go up or not tomorrow, but no one can deny that in the long run the investment in the equity linked schemes is going to pay-off for sure. So earning a handsome return out of it is no rocket science. The easiest way to tame this unpredictable bucking bull is to start SIP Investment (Systematic investment plans).
When an investor tries to time the market he either misses out on opportunities or ends up facing considerable loss. With SIP investment, the investor doesn’t have to time the market. Through an SIP investment a individual can buy units on a given date of each month and take advantage of compounding returns. One can even start SIP investment with ₹500 per month. An investor can invest monthly or quarterly through NACH or post-dated cheques.
Now the question is how much return can the investor expect from SIP Investment?
If a person starts SIP investment. Then by the end of 5 years he can earn return at the rate of as high as 30%.
|Mutual Fund Scheme||Return CAGR|
|Franklin India Prima Fund(G)||22.91|
|Birla Sunlife Fronline Equity||14.37|
|ICICI Value Discovery||19.92|
|BSL Pure Value||24.25|
|DSP Blackrock Microcap||31.84|
Now coming to the second part. How early is early enough to start SIP Investment?
The best way to answer this question is by presenting a simple example. If a person starts investing at the age of 30 and invests ₹5000 per month then by the time he reaches 45 the amount saved will be ₹9 lakhs whereas the expected amount will be ₹21 lakhs (taking 10% return rate). Through the same investment plan by the time he reaches 60 the invested amount will be ₹18 lakhs whereas the expected worth will be ₹1.1 crore. If the same person was financially educated and started 10 years earlier then by the time he reached 45 the amount invested would have been ₹15 lakhs and expected outcome ₹67 lakhs. And surprisingly by the time he would have reached 60 the invested amount would have been ₹24lakhs and expected worth of the investment a whopping ₹3.2 crores.
So, the answer is start investing today. Don’t lose the opportunity to accumulate wealth while you can. Download the WealthTrust Mutual Fund app and start SIP Investment now.
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