SIP Tips: Build a fund worth lakhs with an SIP of just ₹16 a day..

SIP: Whenever we think about investing or wealth creation, the first thought that comes to mind is that it requires thousands or lakhs of rupees every month. Due to limited income, many people never even start investing. However, the actual world of investing is quite different from this perception. The Systematic Investment Plan (SIP) in mutual funds has emerged as an excellent and safe tool for ordinary investors, transforming the very meaning of investing.

You no longer need a large sum of money to build a substantial fund. You can create a strong financial foundation for the future using money saved from your pocket money or small, everyday expenses. A regular investment of just ₹16 to ₹35 a day—leveraging the power of compounding and rupee-cost averaging—can build a corpus worth lakhs of rupees over the long term.

The magic math of saving just ₹16
If you cannot invest a huge amount, you can start with an SIP of just ₹500 per month. Broken down to a daily basis, this amounts to only ₹16 to ₹17. Nowadays, even a cup of tea costs more than that. Even with such a small amount, the power of compounding can help you build a significant fund.

If you invest consistently for 10 years with an estimated annual return of 12%, your total investment over this period will be ₹60,000. On this invested capital, you would earn an estimated return of approximately ₹56,169. Consequently, after ten years, your total fund would grow to ₹1,16,169 (approximately ₹1.16 lakh).

If you continue this investment uninterrupted for 15 years, your total investment will amount to ₹90,000. However, thanks to the power of compounding, this will yield a return of ₹1,62,288, bringing the total value to approximately ₹2.52 lakh. On the other hand, if you continue this investment with a long-term horizon of 25 years, your total contribution will amount to ₹1.50 lakh. You would earn a substantial estimated interest of ₹7,98,807 on this, easily pushing your total corpus close to ₹9.50 lakh.

An investment of ₹33 creates a massive corpus
A small adjustment to your investment amount can help you achieve your financial goals much faster. If you double your investment from ₹500 to ₹1,000 per month, the long-term impact is truly remarkable. In daily terms, this amounts to a saving of just around ₹33.

According to the figures, if a monthly SIP of ₹1,000 is continued uninterrupted for 25 years, your total investment over that period would be ₹3 lakh. Interestingly, the interest earned alone on this modest capital would exceed ₹15.97 lakh. This means that when the investment matures after 25 years, you would have a substantial sum of nearly ₹19 lakh. This demonstrates that the duration of the investment is far more critical than the investment amount itself when it comes to building a large corpus. SIP Calculation Based on an Estimated 12% Annual Return

Monthly SIP    Tenure (Years)    Total Invested Amount (₹)    Estimated Return/Interest (₹)    Total Potential Fund (₹)
₹500               10 Years                        60,000                                    56,169                                 1,16,169
₹500              15 Years                          90,000                                  1,62,288                               2,52,288
₹500             25 Years                          1,50,000                                7,98,807                               9,48,807
₹1,000         10 Years                         1,20,000                                   1,12,339                               2,32,339
₹1,000           15 Years                      1,80,000                                    3,24,576                                5,04,576
₹1,000           25 Years                      3,00,000                                   15,97,614                             18,97,614

The Secret to Profit Lies in a Market Downturn
New investors often get anxious witnessing stock market fluctuations. Frequently, when the market falls, people panic and stop their ongoing SIPs. For an investor, this proves to be a major mistake. In reality, the principle of 'Rupee Cost Averaging' works in mutual funds. During a downturn, when the market is low, the same investment amount fetches you a higher number of mutual fund units. Later, when the market rebounds and enters a growth phase, these extra units—purchased at a lower price—significantly boost your returns. Therefore, instead of stopping your investment during a market decline, you should continue with it.

Points to Consider When Starting an Investment
Financial experts believe that the earlier you start investing, the more effectively the power of compounding works in your favor. As your income grows over time, you should increase your investments in the same proportion. Make sure to raise your SIP amount by at least 5 to 10 percent every year. This is a highly effective strategy that allows your fund to grow much faster than expected, enabling you to achieve your financial goals with ease.

Disclaimer: This content has been sourced and edited from TV9. 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.