The Systematic Investment Plan (SIP) has become a favoured choice among all sizes of investors who want to accumulate wealth gradually over a period of time. An investor can deposit a definite amount at regular intervals and it will witness the compounding growth over the years.
The SIP is considered a friendly investment where an investor can start with a small amount of money. The investor will yield a high return by depositing a fixed amount of money as it increases with time.
When an individual chooses the fixed investment amount, it is deducted automatically from the account and invested in the selected mutual fund. The individual gets the allocated mutual fund based on its Net Value Assets (NVA) on the date he starts the investment. As the SIP installments are deposited, it starts adding the additional components and reinvesting money that grows with the market trends.
A person should start SIP as early as possible to get higher and better returns. An investor should take a cue from the market while choosing which mutual fund can yield good returns and plan the SIP accordingly.
An investor can make Rs 1 crore by simply investing Rs 9000 per month in SIP. A calculation suggests that if the investor deposits Rs 9000 for 22 years, he would make Rs 1 crore. The investor will deposit a total of around 23,76,000 and he would receive estimated returns of around Rs 82 lakh 52 thousand. The total value is estimated to be around Rs 1 crore 6 lakhs.
