SIP Tips: Why are people not able to become millionaires through SIP? Where is the deficiency?
You must have heard that by investing in mutual funds, one can become a millionaire. Very good profits can be earned. But you would hardly have seen anyone becoming rich by investing in SIP. Why do most people fail? People do everything right, but do not use their biggest weapon. Because of this, people are not able to earn the profits that they could have earned. In reality, the biggest tool to create a treasure of crores is time. If you give time and have patience, you will earn so much money that you cannot even imagine.
SIP in mutual funds is a way of investing in which you invest a fixed amount every month, and over time, you pay small installments. You should also have an idea of when and at what speed these small installments turn into a big amount.
If you invest only Rs 10,000 per month and invest without stopping for 21 years, then this amount can grow from lakhs to crores. In the first few years, this speed is slow, just like the seed of a tree slowly takes root. But as time passes, the magic of compounding starts showing its true colors, and in the last few years, your money flies like a rocket.
Here we are explaining with a real example. This information is based on 21 years of data from the Nifty 50 TRI index. In this, SIP of 10,000 per month has been done from January 2004 to December 2024. See the result and understand for yourself when the real game of compounding begins.
First phase (0-7 years)
Investment: ₹8,40,000 (Rs 10,000 per month)
Total value: ₹17,21,882
Profit: ₹8,81,882 (only 9% share of total profit)
In the beginning, SIP runs a little slow. Just like the plant grows slowly after sowing the seed, similarly, the profit is less visible in the first 7 years. Patience is the key at this point.
Stage 2 (7-14 years)
Investment: ₹16,80,000 (Rs 10,000 per month)
Total Value: ₹45,78,524
Profit: ₹28,98,524 (20% profit share)
Now the effect of compounding starts showing. Your money starts making money, and the graph starts moving upwards.
Stage 3 (14-21 years)
Investment: ₹25,20,000 (Rs 10,000 per month)
Total Value: ₹1,26,39,457
Profit: ₹1,01,19,457 (71% profit share)
This is the period where the magic of compounding is at its peak. Now your money works for you, and every year's growth is much more than the previous year's. This is why big investors always advise staying invested for a long time.
To become a millionaire through SIP, no magic wand is needed; only three things are needed-
Regular investment - whether the market is up or down.
Long term - have a view of at least 15-20 years.
Patience and faith - do not panic and leave in the middle.
Disclaimer: This content has been sourced and edited from News 18 hindi. 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.
