Mutual Fund SIP: Every parent dreams that their child has a bright future and does not have to face any kind of financial problem. For this it is very important to plan proper investment on time. If you start a Systematic Investment Plan (SIP) as soon as your child is born, after 18 years your child can own around ₹ 50,00,000. Come on, let's find out how.
Mutual Fund SIP: A safe and profitable option
Mutual Fund SIP can prove to be a safe and beneficial option for your child's future. This is a plan that can beat inflation and build a good fund for the future. Through this, you can invest small amounts every month, which add up to big sums in the long run.
5% Top-Up: Smart way to grow your investment
If you start a SIP of ₹5000 and increase it by 5 percent every year, you can reap huge benefits. Top-up SIP is a facility where you can increase your regular SIP by a certain percentage every year. For example:
- First year: ₹5000 per month
- Second year: ₹5000 + 5% = ₹5250 per month
- Third year: ₹5250 + 5% = ₹5513 per month
This way, you increase your SIP by 5% every yea0
How to accumulate more than ₹50,00,000 in 18 years?
If you run a SIP of ₹5000 for 18 years with a top-up of 5 percent per annum, you will invest a total of ₹16,87,943. The average return on SIP over the long term is considered to be 12%. At 12%, you will get only ₹34,57,451 as interest. Thus, after 18 years your child will own ₹ 51,45,394. If the return is more than 12%, the amount will be higher even after 18 years.
Advantages of Investing in SIP
Compound interest: The biggest advantage of SIP is that it offers compound interest. That means you also get interest on interest, due to which your investment grows faster.
Risk reduction: Regular investment can give good average returns despite market fluctuations.
Discipline: Through SIP you follow a disciplined investment plan, which leads to regular investment
Conclusion – Mutual Fund SIP
Starting to invest in SIPs as soon as the baby is born can be a wise and prudent move. This will create a strong financial foundation for your child's future. All you have to do is adopt this strategy with proper planning and discipline, so that your child does not have to worry about higher studies and other important expenses when he grows up.
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