SIP Investment: You can make a good amount by investing Rs 500 every month through SIP. This is a safe way of investment, in which the effect of market fluctuations is less, but investment should be done thoughtfully.
SIP Investment: Every person wants his future to be secure, and he can make something big with his hard-earned money. But often it seems that a lot of money is needed to start investing. SIP i.e. Systematic Investment Plan has come to change this thinking, in which you can gradually make a good amount by investing a small amount (like Rs 500) every month.
SIP protects you from market fluctuations, and can make your small savings big over time through compounding. If you invest Rs 500 every month in a mutual fund through SIP and the average annual return of that fund is 12% (which is considered normal for good equity funds), then how much will you get after 5 years and also understand how much risk is there in it. Let’s understand.
| Description | Figure |
|---|---|
| Monthly Investment Amount | ₹500 |
| Investment Period | 5 Years (60 Months) |
| Total Investment Amount | ₹30,000 |
| Estimated Average Return | 12% per annum |
| Estimated total value | ₹ 42,000 approx |
| Estimated profit | ₹12,000 |
How safe is SIP?
The SIP format itself is a safe way of investing because you invest regularly in small amounts, which reduces the impact of market fluctuations. But it is important to understand the quality of the fund in which the SIP is being invested and the market risk.
If you have chosen an equity fund, it is linked to the market, meaning the risk is a little higher but returns can also be better.
If you have chosen a debt fund, the risk is less, but the returns may also be slightly lower.
SIP continues even during market downturns, allowing you to get your units at a lower price, and can be beneficial in the long run.
According to experts, before starting investing, you must understand the past performance of that fund, its management quality, and your financial goals. SIP can create wealth in the long term, but since it is linked to the stock market, there is no guarantee.
