Unlocking Wealth with Mutual Fund SIPs: A beginner’s guide to systematic investment plans

financialexpress.com:

It was October 2004, and I peacefully minding my business in my office when a colleague came by for a chat. He was an investment expert, and for the next fifteen minutes, I got the full lowdown on a new product that he was very enthusiastic about – Systematic Investment Plans (SIPs). It made sense, and I signed up for a Rs 3000 monthly SIP into an equity mutual fund. I essentially committed to investing Rs 3000 every month into this fund without fail, irrespective of what was happening to the markets.

Fast forward twenty years, and let us assume that I had continued that SIP all this while. My corpus would be worth over Rs 20 lakh! Markets have given a ~13% average annual return over this period, and regularly investing a couple of thousand bucks would now be worth millions–the sheer power of compounding. And what if I had started a decade earlier? A Rs 3,000 SIP, if started in 1994, would be worth a whopping Rs 85 lakh today! Imagine–an 8x return without expertise or effort other than diligently investing a relatively small sum, no matter what is happening to the markets.

If you want to create long-term wealth, systematic investment plans in equity mutual funds will be one the best weapons in your armoury. Let us learn more about them.

For people who do not have the time or expertise to invest in equities, equity mutual funds are an excellent option. You give your money to experts and delegate the entire stock selection and investment process to them. They select the stock portfolio, pool in all the funds from investors like yourself, and invest on your behalf. They make all the investment decisions while giving you complete flexibility in withdrawing your investment whenever you want. It is a very transparent process;