SIP is a short form of Systematic investment plans. It is an automated method of investing a fixed amount in mutual funds^^ every month. You can start investing in mutual funds even with a monthly SIP of Rs. 500. The best part is that the selected amount will be automatically deducted from your bank account every month and will be invested in mutual funds on a pre-decided date. It is a great way to automate your investing habits. The idea is to make the investment process simpler, as there is no defined rule to invest a particular amount or select a particular date. You can choose any date that looks comfortable to you.
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Becoming rich is a common goal of almost every investor and every earning individual who is in their nascent stage of investment. To achieve that goal, you need to modify your investment portfolio that can help you become rich and also meet your investment and long-term financial goals.
And, a common question that most of the investors ask from their investment advisors is that if SIPs in mutual funds can help them become rich or a Crorepati in long-term?
Well, it does boost wealth in long-term but it requires you to choose the right mode of investment and stay invested for long-term. To start a monthly SIP is one such step. You can enhance your investments annually to meet investment needs as your income grows.
Let’s understand this with a simple illustration:
Let’s say you start a monthly SIP of Rs. 5,000 in mutual funds. Your investment horizon is 20 years and looking at the historical returns you can expect 12% returns in the long run. So, going with a return of 12 percent on monthly 5000 Rupees SIP, the online SIP calculator suggests that one you can get Rs. 49.5 lakhs as a maturity amount. Here, your net investment is only Rs. 12 lakh and wealth gained is more than double.
Below are some of the reasons to start your SIP in mutual funds if you want to become rich:
Regular investment is essential for wealth creation. And SIP helps you regularize your investment. You can initiate ECS on your bank accounts and also give your bank a standing instruction to invest a certain amount every month automatically in SIP mutual funds. It is quite easy and simply to automate your investments, which otherwise most of us tend to miss amid our busy schedules.
The reason why SIPs help you become rich is that it requires you to invest periodically. There is no option but to set aside a fixed sum every month towards SIPs. Therefore, you become financially disciplined by choosing the SIP route.
The key to growing your wealth is to start early and make regular investments. With SIPs, the minimum amount required to start an investment can be as low as Rs 500 a month. Even first time investors can create wealth by investing a small amount month. And then increase the amount with an increase in income.
The equity markets have always been volatile. But SIPs in mutual funds avert the risk of market fluctuations. Because you invest a fixed amount every month in mutual funds, investors are able to buy more fund units when the market dips and fewer units when the markets is reviving, which reduces the average cost pre unit. The factor of volatility is reduced, which in turn increases the overall gains. Moreover, there is no need to time the market.
SIPs earn you money through the power of compounding. Investing a small amount of money for a longer duration can get you good returns. By investing a small amount at regular intervals you can build a large corpus and meet your long-term financial goals.
Here are some of the best SIP plans that you can consider investing in 2024:
Name of the fund
1 Year Returns (in%)
3-Year Returns (in %)
5- Year Returns (in%)
Mirae Asset Emerging Bluechip Fund
ICICI Prudential All Seasons Bond Fund
SBI Small Cap Fund
ICICI Prudential Balanced Advantage Fund
HDFC Hybrid Equity Fund
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A SIP calculator is an online tool that helps you estimate the return on your SIPs in mutual funds. Most of the investors are opting for the SIP route to invest in mutual funds, which makes it one of the most popular investment options among millennials. The tool basically helps potential investors by giving them ideas regarding the returns that they can expect from their mutual fund investments. However, the actual returns would vary on the basis of various other factors. Please note that an online SIP calculator would not take into account the expense ratio and the exit load.
It is quite simple and time saving to use a SIP calculator. You need to just enter the values like the investment amount, duration of investment, frequency of investment, and the expected rate of returns.
The maturity amount is generated on the basis of the compound interest formula on the basis of the value entered by you. This will give you a fair idea as to how much you should invest to build the desired corpus.
So, if you want to become rich you can see how SIPs health you gain wealth with the power of compounding. Even if you are a safe investor you can start your SIPs in mutual funds. It will save you from the hassle of timing the market. SIP calculators make it even easier by fiving you an idea as to how your investment portfolio would look like. However, the key to becoming rich or wealth creation is to stay invested for a long period of time in order to earn higher returns.
*All savings are provided by the insurer as per the IRDAI approved
insurance plan. Standard T&C Apply
Tax benefit is subject to changes in tax laws. Standard T&C Apply
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^10(10D) Tax benefit are for Investments made up to Rs.2.5 L/ yr and are subject to change as per tax laws.
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.
Expected Rate of Return (Yearly)
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