To see the real power of compounding, one should continue investing in mutual funds for as long as possible. To create a fund of Rs 10 crore in a short time with a SIP of Rs 5,000, you will have to use the step-up formula.
Mutual Fund SIP: Mutual Fund SIP is considered to be the best investment tool to make big money in the long term. According to AMFI data, Mutual Fund SIP has given investors a huge amount of money in the long term. Actually, investors get two big benefits in Mutual Fund SIP. In this investment option, you get the strong benefit of compounding along with attractive returns of the stock market. Here we will know how to create a fund of Rs 10 crore from a SIP of Rs 5,000.
Investment has to be continued with the step-up formula
If you want to see the real power of compounding, then you should continue investing in mutual funds for as long as possible. To create a fund of Rs 10 crore in less time from a SIP of Rs 5,000, you have to use the step-up formula. Under this formula, you have to increase the amount of your investment every year. With the help of this formula, you can create a fund of Rs 10 crore by starting a SIP with just Rs 5,000.
A fund of Rs 10.19 crore can be ready in 36 years
If you are starting a SIP with Rs 5,000 and you get an average expected return of 12 percent every year, then in 36 years you can create a huge fund of Rs 10.19 crore. For this, you will have to do a step-up of 10 percent every year in your SIP.
A fund of Rs 10.50 crore can be ready in 35 years
Apart from this, if you are starting a SIP with Rs 5,000 and you get an average expected return of 15 percent every year, then in 35 years you can create a strong corpus of Rs 10.50 crore. For this, you will have to do a step-up of 5 percent every year in your SIP.
