SIP Investment: SIP’s “7-5-3-1” rule helps in investing with the right strategy. With the right planning and regular investment, a fund of up to Rs 1 crore, let alone 10 crore, can be created.
SIP Investment: If you are thinking of becoming a millionaire in the long run, then SIP (Systematic Investment Plan) can be the best way for you. SIP’s “7-5-3-1” rule helps in investing with the right strategy. With the right planning and regular investment, a fund of up to Rs 1 crore, let alone 10 crore, can be created. By following this rule, not only can you handle the volatility of the market but you can also fulfill your dream of financial freedom.
What is Rule 7-5-3-1 of SIP?
This is a strategy that can help you create a fund of not only 1 crore but also 10 crores. Let’s know how.
Rule 7: Understand the first rule
It is most important to stay in SIP for a long time. Stay in the market for at least 7 years. Do not be afraid of the decline. For example, the market fell by 40% during COVID, yet the returns were excellent.
Rule 5: Look at 5 points to choose a fund
- Good Quality Fund: Avoid NFO.
- Growth Track Record: Look at past performance.
- Expense Ratio < 1%: Choose a cheap fund.
- Check Holdings: Pay attention to the portfolio.
- Equity Allocation: Understand how much to invest in equity.
Rule 3: Keep in mind three situations
- Negative Return Phase: Negative returns of up to 7-15% during SIP are normal.
- Irritation Phase: There can be flat growth for 1-2 years.
- Panic Phase: Do not panic in situations like 2008. Stay tuned.
Rule 1: SIP step-up
Increase your SIP by 10% every year. This is called Step-Up SIP, which increases your investment rapidly. By following this rule, you can easily reach your goal. Invest in the market with patience and wisdom.
Disclaimer: Consult a financial advisor
Consistency and Step-Up are both important in SIP. Instead of panicking due to market fall, maintain investment for a long time. Do research before choosing Equity Mutual Funds. Consult a financial advisor.
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