SIP vs Step-Up SIP: If you want to create wealth for yourself, then mutual fund SIP can prove to be a better way of investment. There is a tremendous benefit of compounding in long-term SIP. You can invest in SIP in two ways.
SIP vs Step-Up SIP: First, you start SIP with a fixed amount and keep investing the same amount for a long term. On the other hand, if you want to achieve financial goals in a short time, then you can opt for Step-Up SIP. Suppose you want to add Rs 1 crore through SIP in 20 years, then know how much you will have to invest in Regular SIP and Step-Up SIP? Understand.
This is how you will become a millionaire in 20 years through Regular SIP
If you want to become a millionaire in 20 years through Regular SIP, then you will have to invest at least Rs 11,000 every month. By investing Rs 11,000 every month for 20 consecutive years, you will invest a total of Rs 26,40,000. The average return of SIP is considered to be 12 percent. If you calculate according to 12 percent return, then you will get a total of Rs 83,50,627 as interest in 20 years. In this way, after 20 years, by combining the invested amount and interest, you will become the owner of Rs 1,09,90,627.
Step-Up SIP: Understand what it is before calculation?
Step-Up SIP is also called Top-up SIP. To make money in this, you will have to top-up the SIP from time to time. Suppose you start SIP with Rs 5,000 and top-up the SIP amount by 10% every year. In this way, you will have to increase the amount by 10% every year and invest in your current SIP. You will have to increase it and with this trick you will accumulate a huge fund in a few years. Understand how-
Understand with an example
Suppose you started a SIP of Rs 5,000, then deposit Rs 5,000 every month for one year. Then next year you have to increase it by 10% of Rs 5,000 i.e. Rs 500. In this case, your SIP for the next year i.e. second year will become Rs 5,500. Then next year i.e. third year you will have to increase 10 percent of Rs 5,500 i.e. Rs 550 more. In this way your SIP will become Rs 6,050 in the second year. In this way you have to increase the current SIP by 10 percent every year.
Now know how to become a millionaire in 20 years with Step-Up SIP?
If you choose the option of Step-Up SIP and aim to accumulate Rs 1 crore in 20 years, then you will have to start investing in it from Rs 5,100. Run a SIP of Rs 5,100 for 1 year, after that keep applying top-up every year at the rate of 10%, as told in the example above. In this way, your total investment in 20 years will be Rs 35,05,230. On this, you will get a return of Rs 66,38,015 and in 20 years you will become the owner of Rs 1,01,43,245.
Understand this too
SIP is a market linked scheme. Through this, investment is made in mutual funds. In such a situation, you have to keep in mind that the return of SIP is also market based. Meaning, the return cannot be guaranteed in this. However, experts believe that the average return of SIP in the long term is around 12 percent, on the basis of which we have done this calculation. But this return can also be less or more depending on the market.
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