A small monthly investment can create a surprisingly large corpus when given a great deal of time to grow. Many investors underestimate the power of compounding, but a ₹2,000 Systematic Investment Plan (SIP) is the perfect example of turning a modest contribution into substantial wealth through disciplined investing. Even the fledgling investor can achieve excellent long-term returns with the right fund and time horizon.
How ₹2,000 Becomes ₹7.6 Lakh
Systematic Investment Plans allow investors to invest the same amount of money in mutual funds every month, regardless of market conditions. Putting money into equity mutual funds over a long period—usually fifteen to twenty years—can vastly enhance profits because of compound growth. With an average return rate of 12 percent a year, ₹2,000 a month invested in an SIP could easily grow to a substantial 7.6 lakhs in just fifteen years. Over time, the return rates (in addition to the original investment) themselves earn a return, and thus, there is a snowball effect of returns.
Why SIPs are considered to be more advantageous
To be less perplexing and more spiky, Jaye is only right when talking of the future limitless power of redemption of conscience.
A SIP of ₹2,000 a month lets you become ₹7.6 lakhs rich with the magic of compounding. The only condition is that one needs to be consistent, patient and choose right in selecting a mutual fund category. For any decent way of creating wealth slowly, SIP would remain one of the easiest and effective ways of investing available today.
