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Mutual Fund SIP: Mutual fund SIP is considered to be the best investment instrument to earn big money in the long term. According to AMFI data, mutual fund SIP has given investors a big amount 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 a fund of Rs 10 crore can be created 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, you should keep 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 have to use the step-up formula. Under this formula, you have to increase your investment amount 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 per cent per year, then in 36 years you can create a huge fund of Rs 10.19 crore. For this, you will have to step-up your SIP by 10 per cent every year.
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 per cent every year, then in 35 years you can create a strong fund of Rs 10.50 crore. For this, you will have to make a step-up of 5 per cent every year in your SIP.