Even those with low earnings can become 'lakhpatis'! Here’s how you can build a fund of over ₹15 lakh by saving ₹100 every day..
Are you unable to save money due to a lack of funds? If so, this information is for you. Saving doesn't require a massive lump sum; it simply calls for the right start and a bit of patience. By saving just ₹100 a day, you can build a substantial fund for the future. Let’s explore how a Systematic Investment Plan (SIP) in mutual funds works.
What is the formula for a mutual fund SIP?
If you save ₹100 daily, it amounts to ₹3,000 per month. If you invest this ₹3,000 every month into a mutual fund SIP—assuming an average annual return of 12%—let’s look at the table below to see how your money grows over time:
Investment Duration | Monthly Investment | Total Investment | Estimated Returns | Total Fund (Maturity Value)
5 Years | ₹3,000 | ₹1.80 Lakh | ₹67,459 | ₹2.47 Lakh
10 Years | ₹3,000 | ₹3.60 Lakh | ₹3.37 Lakh | ₹6.97 Lakh
15 Years | ₹3,000 | ₹5.40 Lakh | ₹9.73 Lakh | ₹15.13 Lakh
The Power of Compounding
The best aspect of an SIP is that you earn interest on your interest—in other words, you benefit from the power of compounding. You earn returns not only on the principal amount you have invested but also on the returns accumulated over time.
This is why, in the initial years, the difference between your total investment and the returns may not be very noticeable; however, as time passes, the growth curve begins to rise sharply. Therefore, what matters more than the amount you invest initially is how long you continue your investment.
Disclaimer: This content has been sourced and edited from Dainik Jagran. 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.
