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Earn money through SIP investment: If you regularly adopt the mentioned methods, then after making a monthly investment of just Rs 500, you can earn Rs 1.25 lakh in the next 10 years. Although it is also true that the stock market is subject to risk and one should invest in it based on one's own risk and wisdom, yet there is always a strong possibility of not getting the desired ROI. The method we are talking about adopting under the above heading is SIP.
What is SIP, from which you get money?
SIP means Systematic Investment Plan. As its name suggests, SIP is a regular and systematic way of investing. Under this, a small but pre-determined amount is allocated for investment in the stock market at regular intervals (usually every month). It is considered a preferred method of investing in equities as the risk is controlled very delicately and effectively, which is possible despite investing money in the market. Now the question arises that how does it turn your few hundred rupees into lakhs? Let us understand this.
Understand what SIP means…
SIP actually works for two things, first, rupee cost averaging and second, compounding. SIP helps you protect yourself from market volatility by eliminating the guessing game of market performance and in the long run, the average purchase cost equalizes. When the market is rising, you get fewer units, and when the market is falling, you get more units. This reduces your risk and gives you investment at a lower average cost per unit.
Make Rs 1.25 lakh by investing Rs 500 monthly, this is the calculation
For example, if you make a SIP investment of Rs 500 per month and you do this every month for 10 consecutive years, you can get a good amount as returns on it. According to the average return percentage of 12 percent, you get interest of Rs 56 thousand 170 on the investment amount of Rs 60 thousand. In this way your total money becomes Rs 1 lakh 16 thousand 170.