While everyone has sweet dreams of becoming a millionaire, very few know about the right path to that destination. What if investing merely ₹ 2,000 in a Systematic Investment Plan (SIP) could help you create wealth worth crores over time? You have to undergo the discipline and patience it takes to implement a proven strategy. Let’s break that down step by step.
The Power of SIP: Small Investments to Make Big Returns
SIPs in mutual funds allow one to deposit a fixed amount at regular intervals, benefiting from market volatility and compounding returns. Unlike a lump sum deposit, the risk in SIP is reduced because the average cost of the purchase price is spread out over time.
The Magic Formula: 10/35/12 Rule
To turn ₹2,000 into ₹3 crores, follow this simple yet powerful formula:
- 10% Top-Up: Increase your SIP by 10% every year.
- 35 Years: Stay invested for the long term.
- 12% Return: Aim for an average annual return of 12%.
How Does It Work?
Imagine you start a ₹2,000 SIP at age 25. Here’s how your investment grows:
- Year 1: ₹2,000/month
- Year 2: ₹2,200/month (10% increase)
- Year 3: ₹2,420/month
- …and so on for 35 years.
By the end of 35 years, your total investment would be ₹65 lakhs, but thanks to compounding, your corpus could grow to ₹3.15 crores at a 12% annual return.
