SIP benefits: SIP is the best and best way to invest. The amount is small, but if you invest for a long period, then the returns will be great. If you top-up the SIP by 10-15% every year, then the returns will be many times more.
Investment Tips: SIP i.e. Systematic Investment Plan is considered to be the most effective way of investment. This can be done on a monthly, quarterly or half yearly basis. Its biggest feature is that due to the small amount, the burden on the investors is less. Especially if you want to invest for a long period, then SIP is the most effective way. Due to the long tenure, compounding benefits are available and the returns are manifold. If you also invest in mutual funds with the help of SIP, then it is important to keep three major things in mind.
Always continue SIP
Firoz Aziz, Deputy CEO, Anandarathi Wealth Management, said in the program Money Guru of Zee Business that the most important thing is to continue the SIP. The volatility in the market continues. Due to this, your portfolio will sometimes be in profit and sometimes it will be in loss, but it has to be continued under any circumstances. In SIP it does not matter much how much you deposit every month. If the amount is small but the continuity is maintained, then the longer you stay, the higher will be the returns.
Make a lump sum deposit in between
Expert said that apart from SIP, keep depositing lump sum money in between. If you are getting additional income from somewhere, then it will be beneficial to buy extra units with that money. If the market goes down and the NAV (Net Asset Value) of the mutual fund falls, then seize the opportunity and invest the lump sum amount.
Top up SIP
Since inflation is rising, you will need more money to meet your needs in the coming times. Every year your earning also increases. If you do a job, you get the benefit of increment every year. Top-up the SIP on the same lines every year. Simply put, increasing the SIP amount every year will be more beneficial. Let us try to understand with an example the benefits of doing SIP top-up.
Starts SIP of 5000
Let’s say ‘A’ is 35 years old and started SIP for retirement. If he starts a SIP of Rs 5000 every month at the age of 35 and expects a rate of return of 12 per cent, then at the age of 60, he will get a total of Rs 95 lakh. The total investment of ‘A’ in these 25 years will be Rs 15 lakh. The return will be close to 80 lakhs and the net return will be Rs 95 lakhs.
Net returns from step-ups doubled
Coming to the step-up, let’s say ‘A’ decides to increase the SIP at the rate of 10 per cent every year. If he invests 5000 rupees every month in 2022, then in 2023 he will deposit 5500 rupees every month. In this situation, he will get a total of Rs 2 crore on completion of 60 years of age. Due to the step-up, his total investment will be close to 59 lakhs. The return will be 1.42 crores and the net return will be a little more than 2 crores.
