Although mutual funds are vulnerable to market risk, the risk element is at its lowest level when investing in long-term equity mutual funds. According to tax and investment experts, the return on long-term mutual funds increases but the risk associated decreases if the investment style is a systematic investment plan or SIP. A mutual fund SIP plan allows an investor to grow a significant sum with modest investments without worrying about market volatility or timing.
They claimed that long-term savings of Rs 1,000 per month might result in an accumulation of Rs 1 crore. So, how can you do that?
Can A Small Sum Of Money Transform Your Future?
Yes! If you consistently invest Rs 1,000 per month for 20 years, it will have the ability to compound and build up into a sizable corpus. Your future financial well-being may change as a result of this consistency.
By employing SIP on an ongoing basis, one can invest a tiny sum (weekly, monthly, and quarterly). Additionally, it provides regular investors with a disciplined method of investing. This, in turn, fosters a favorable outlook on investment for long-term wealth creation. You can always use a SIP calculator to determine your SIP. Simply put, a SIP calculator aids you in deciding your predicted returns and wealth increase.
You can develop financial self-discipline and saving habit by participating in a SIP. The earlier, the better is a maxim that applies to all investments, including SIPs.
The automation of a SIP is a significant aspect of its investment wisdom. For instance, if you initiated a SIP of Rs 1,000 in a mutual fund, this sum will automatically be taken from your bank account each month on a specific date and invested in the mutual fund of your choice.
Place of investment matters
The typical course of action for most Indians is to make a recurring deposit (a monthly version of an FD) at a scheduled bank. Even though this might sound logical, two factors limit the earning potential.
First, the average rate of interest paid is 7 percent, but that rate is rapidly decreasing due to the demonetization, which has filled the banks with an abundance of cash. Second, depending on your tax bracket, you might expect to pay up to 30% in taxes on your income.
Here’s how to invest in the best SIP Plans with Rs 1000/month
Given the small investment, it is essential to consider various criteria while choosing the optimum strategy. Your goals, risk tolerance, investment objective, present financial status, and investment horizon should all be considered. Follow these steps to choose the finest SIP plan for just Rs. 1,000 each month.
- The power of compounding should be used and result in improved profits if the investment horizon is long enough.
- To keep the potential risk low, think about investing in successful companies’ stocks. Start diversifying your portfolio among companies with various market capitalizations as soon as you understand how the equity market operates.
- Investing in blue-chip shares may provide you with the necessary profits if you are a newbie. These equities are held by businesses that have consistently produced great financial results.
- Avoid buying penny stocks or small-cap equity funds that trade at discount pricing. Even while such investments often carry a high level of risk, the profits could be considerable.
Bottom Line
New and wannabe investors typically wait until they have a certain amount of money before investing. As a result, there is less chance of making money in the current market. You should start saving as soon as possible and increase your investment amount as your income rises. SIP plans now start at as few as Rs 1000 per month.
SIPs give you access to market-linked investments. These strategies are suitable if you want to reduce the risk brought on by market fluctuations while still reaping significant rewards. To minimize risk, you can also decide to diversify your investments. You can invest in financial assets linked to the market with SIPs for as low as Rs. 1,000 per month and earn large returns.
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