SIP Tips: As soon as you get a job, start with a SIP of Rs 1,000, you will get Rs 1 crore on retirement, this is the calculation..
Financial advisors always say that one should get into the habit of investing and saving as soon as possible. If you understand the importance of investing and saving at the beginning of your career, then your life can be completely tension-free after retirement. By starting investing at a young age, your investment gets compounded and you get a long time for growth. Compounding is a magic that can increase your wealth manifold. If you want to take full advantage of this magic, then you can consider mutual fund SIP. Next, with the help of calculations, we will tell you how you can create a retirement corpus of Rs 1 crore by starting a SIP of Rs 1,000 at the age of 25.
SIP means a great miracle of small savings
SIP is an option in mutual funds, through which you can invest small amounts every month. In this, you have to decide an amount and date for investment every month. Every month the amount decided on that date is deducted from your account and invested in the mutual fund. Except for tax saving schemes like ELSS, there is no fixed period for SIP, you can invest as long as you want.
Only tax-saving ELSS has a lock-in period of 3 years.
By the way, the longer your investment through SIP lasts, the more you will get the benefit of compounding. Usually, monthly SIP is done, but if you want, you can also invest on a weekly, quarterly, half-yearly, or yearly basis. You can decide the amount of SIP according to your income and wealth creation goal.
You can give the power of step-up or top-up to SIP
Increasing the amount you have fixed for a Systematic Investment Plan (SIP) by some percentage every year is called top-up or step-up SIP. By doing this every year, you can achieve a bigger financial target than a normal SIP. For example,
If you start with a monthly SIP of Rs 5,000 and increase it by 10% every year, then every month Rs 5,000 will be deposited from your account in the scheme chosen by you for 1 year.
After this, from the 13th month onwards, for the next whole year (i.e. from the 13th to the 24th month), Rs 5,500 will be invested every month instead of Rs 5,000.
After this, on completion of 2 years, i.e. from the 25th month, the amount in the SIP of Rs 5,500 will again increase by 10%. In this way, your SIP amount will keep increasing year after year.
Become a millionaire by starting with a SIP of Rs 1000
If you start your career at the age of 25 with a monthly salary of Rs 25,000, then it will not be difficult for you to invest just 4% of your income i.e. Rs 1,000 in a mutual fund SIP. After this, every year as your income increases, you can increase your SIP by just 5%. You will have to do this continuously till the age of 60, i.e. for the next 35 years. By doing this, if you get an annualized return of 12% on your investment, then by the age of 60, you will have accumulated around Rs 1 crore.
