How to make most of your SIPs to achieve financial goals? Here are 4 ways

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SIP closures has been moving higher every month for the last few months. In April 2023 (at the start of the financial year), the monthly SIP closures were at 13.21 lakhs. Let us understand how you can continue your SIPs for a longer period and make the most of them.

Ideally, you should start investing as soon as you start earning. It gives your mutual fund SIP enough time to benefit from the power of compounding in the long term. With a longer time horizon, you increase your probability of earning higher returns and accumulating a higher amount.

For example, Ajay started a monthly SIP of Rs. 10,000 at the age of 25 years. Ten years later, Vijay started a monthly SIP of Rs.

10,000 in the same mutual fund scheme at the age of 35 years. Both of them plan to invest for their retirement till the age of 60 years. They are expecting a return of 12% CAGR.

Let us see how much they will accumulate. Ajay with Rs. 10,000 for 35 years at 12% will have Rs.

6.43 crore Vijay with Rs. 10,000 for 25 years at 12% will have Rs. 1.88 crores The above table shows Ajay started investing ten years earlier than Vijay.

As a result, Ajay's corpus is more than 3 times that of Vijay. Usually, the longer your investment time horizon, the higher the corpus you will accumulate. You should always map each of your SIPs to a specific financial goal.

Various financial goals include building a child education fund or retirement fund, accumulating money for a home loan down payment, starting a business, etc. When you map your SIPs to your financial goals, there will be no temptation to redeem them till the financial goal is achieved. It will make you a disciplined long-term investor.