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Investing in mutual funds can be a good idea for those who want to explore investment options beyond traditional plans, such as fixed deposits (FDs). Most importantly, investors who are willing to take some risk can invest in mutual funds. There are two ways to invest: SIP (systematic investment plan) and a one-time (lump sum) investment. Instead of investing a large amount at one time, you can choose to invest weekly, monthly, quarterly, half-yearly, or yearly through SIPs. Before starting an SIP, an investor should decide their goal. This can be for retirement, education, buying a car or house, or for any other purpose. You should also decide the duration of your SIP to fulfill your financial goals.

SIP has several benefits. Some of them include:

Power of compounding: Because of compound interest, your money can grow multiple times over time. This is calculated on the principal and the interest accumulated over the previous period.

Flexible investment amount: In SIP, you can adjust your investment amount as per your capability. 

Market knowledge: To invest in an SIP, you don't need to have too much market knowledge.

Diversification: You can diversify your portfolio to minimise the risk. 

Rupee cost averaging in SIP: With the rupee cost averaging method, you can take advantage of market volatility. This means when you invest a fixed amount regularly, SIP can average out the value of each unit.

There is no limit to the amount you can invest in a SIP. The minimum amount that you can invest is Rs 500 per month. You can get around 12-15 per cent annual returns in the SIPs.

This article will compare two monthly SIP investments- Rs 3,500 monthly for 30 years and Rs 35,000 monthly for 10 years. The annualised return in each case will be 12 per cent. Let's see which one gives higher returns.

In 30 years, you can accumulate Rs 1,07,83,406 by investing Rs 3,500 per month. The total investment in 30 years will be Rs 12,60,000 and the total estimated returns will be Rs 95,23,406

In 10 years, you can accumulate Rs 78,41,256 by investing Rs 35,000 per month. The total investment will be Rs 42,00,000 and the total estimated returns will be Rs 36,41,256.

Investing in mutual funds is subject to market risks. Consult your advisor before making any investment.

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A senior sub-editor with Zee Business, Bhawna has an experience of almost a decade in writing and reporting in the financial industry. She has previously worked with companies like VCCi ...LATEST NEWSBy accepting cookies, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts.