How can a fund of Rs 5 crore be created from a SIP of Rs 5000? Before knowing the answer to this question, it is important for you to know that the full benefit of SIP will be available only when you continue to invest in it for as long as possible.
Mutual Fund SIP: The number of demat accounts in the country is increasing rapidly because the common investors of the country are now turning to mutual fund SIP for investment. The investment made in mutual fund SIP is increasing continuously. There is a lot of risk in mutual fund SIP, but seeing the better return history, common investors are now investing money in SIP instead of depositing money in banks. Today here we will know how a fund of Rs 5 crore can be created from a SIP of Rs 5000 and how much time it will take.
The longer the investment, the bigger the return
How can a fund of Rs 5 crore be created from a SIP of Rs 5000? Before knowing the answer to this question, it is important for you to know that the full benefit of SIP will be available only when you continue to invest in it for as long as possible. The real benefit of SIP is found only in the long term. The longer you invest in it today, the higher the return you will get.
How to create a fund of Rs 5 crore in 30 years
To create a fund of Rs 5 crore from a SIP of Rs 5000, you will have to use the step-up formula. You will have to start with Rs 5000 in SIP and then increase the SIP amount by 6 percent every year i.e. step-up. With this strategy, if you get an average estimated return of 15 percent every year, then in 30 years you can have a fund of Rs 5.28 crore.
If you get a 12 percent return, how many years will it take to make 5 crores
If you assume that with this investment strategy you get an average estimated return of 12 percent every year, then in 35 years you can create a huge corpus of Rs 5.52 crore. Let us tell you that the return from SIP comes under capital gains, hence you will have to pay capital gains tax on your returns.
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