3-in-1 investment formula: SIP, HIP and TIP… Know why this is important for your future?
In today's fast-paced life, simply earning money isn't enough; investing it in the right place is equally important. Many people are familiar with the term SIP (Systematic Investment Plan), but now two more terms are gaining popularity: HIP and TIP. SIP, HIP, and TIP combine to create a 3-in-1 formula that not only secures your financial future but also provides financial freedom. Let's explore what these three are and why they're important.
SIP: Big Investments with Small Steps
SIP, or Systematic Investment Plan, is the easiest way to invest in mutual funds. You invest a fixed amount (such as ₹500, ₹1000, or ₹5000) every month. The biggest advantage of SIP is the magic of rupee cost averaging and compounding.
Suppose you invest ₹5,000 per month in a SIP for 15 years and earn an average return of 12%. Your total investment will be ₹9 lakh, but the interest earned will be ₹14,79,657, and the maturity amount will be ₹23,79,657. This is the power of compounding.
The longer you invest, the larger the corpus you will build. Think of SIP as your life's "Wealth Creation Tool." It gradually puts money to work for you.
HIP: Health is Real Wealth
HIP stands for Health Insurance Plan. People often think of health policies as an expense, but they are actually an investment—protecting both your health and savings.
A minor illness or hospitalization can wipe out years of savings. If you have health insurance for ₹10 lakh, the insurance company covers the cost of treatment, and your savings are saved.
Financial experts recommend that everyone have health coverage equal to at least 50% of their annual income. If your annual income is ₹10 lakh, you should have health insurance for at least ₹5 lakh.
TIP: A protective shield for your family
TIP stands for Term Insurance Plan. This is the most important investment for your family's financial security. If something untoward happens to you, this policy keeps your family financially secure.
Large coverage at a low premium is its biggest advantage. For example, a 30-year-old can get term insurance for ₹1 crore for ₹10,000-₹12,000 annually. This amount isn't even equal to your monthly EMI, but its benefits are invaluable. Term insurance should be considered a crucial part of your financial plan.
The 3-in-1 Formula: Why is the combination of SIP + HIP + TIP important?
Your financial life is divided into three parts: income, health, and security.
SIP increases your income.
HIP protects your health.
TIP ensures the security of your family.
If you only have a SIP and a medical emergency occurs, your investment will be ruined. Similarly, if you have health coverage but no life insurance, your family could be in trouble. A smart investor focuses not just on returns but also on risk management. SIP, HIP, and TIP together make your money, your health, and your family financially independent.
Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.
