Small investments lead to higher returns with SIP

Relationships and wealth creation may seem to have nothing in common but both work on the same simple principle. Both require you to set the goal first and then start working towards achieving the same. And it’s better to be slow and steady, and committed to get somewhere. Don’t forget the tortoise and rabbit story, holds true for mutual fund investments as well.

Start Small with SIP

Remember, investment in mutual funds doesn’t mean starting with a big amount. It’s your money and your goals, so you get to decide what amount is good for you. Setting up an SIP (Systematic Investment Plan) lets you do just that by letting you invest as much as you’re comfortable. It’s probably easier to invest ₹1,000 each month by cutting down on some weekend shopping than investing ₹12,000 in one go. But do your SIP calculation before investing and see what works best for you.

You can decide to start an SIP investment with an equity based mutual fund or any other type of fund that fits your investment criteria.

Start Early

A began an SIP of ₹2,000 every month from the age of 25, while B started late, at the age of 35, with ₹5,000 a month. By the time they turn 50, A would have invested ₹6 Lakh while B would have invested ₹9 Lakh. Even though B has invested much more than A, the total wealth that A has managed to create (with an assumed 10% rate of return) is ₹25 Lakh, versus B’s ₹20 Lakh, which clearly means that if you start early, you can make your money grow faster to achieve your financial goals that much earlier and easier.

Remember it’s best to be the tortoise and ultimately win the race.