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News Topical, Digital Desk : Most people choose SIP for mutual fund investment. Through SIP, you can build a large fund with small installments. Investments in this form do not affect expenses. Today, we will use SIP calculations to understand how much fund will be created by investing Rs 4,000 per month for 15 years.
calculation
- Investment amount- Rs. 4000 per month
- Investment period – 15 years
If a person invests Rs 4,000 per month in a SIP for 15 years, they will receive Rs 2523,000 at a 12% return. The principal amount will grow to Rs 9 lakh over these 15 years.
What is the 7-5-3-1 rule of SIP?
- 7- Keep the investment period at 7 years
- Invest in 5 different asset classes
- Equity, Bonds, ETFs, Gold etc.
- 3- Don't be afraid of these three types of risks
- 1- Increase your SIP amount every year
Keep the investment period at 7 years
It's believed that you'll only benefit from compounding through SIPs if you wait for 7 years. This means you'll need to keep your investment horizon at 7 years.
Investing in 5 different asset classes
The 5 used in this rule indicates that you should invest in five different asset classes: equities, bonds, real estate, gold, etc. Simply put, you should diversify your portfolio as much as possible to maintain balance.
Don't be afraid of these three types of risks
Investors often face three different types of risks when starting a mutual fund.
Getting 7 to 10 percent returns
At such times, investors often think they could have gotten better returns from fixed deposits. However, we need to understand that mutual fund returns depend on market fluctuations. Therefore, your profit or loss can vary.
0-7% returns
In this situation, people often give up investing and switch to other funds. However, we need to understand the type of fund we've invested in and how long it may take to generate returns. Some funds may take longer to generate profits.
Negative Returns
Negative returns can be discouraging. We should keep in mind that market conditions are always changing, so it's best to wait a bit.
Increase your SIP amount every year
It is also said that investors should increase their SIP amount every year. This increases the chances of earning more profits. The higher the amount, the greater the profit.
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