Tips to become a Smart SIP Investor

Systematic Investment Plan or SIP, if judicially used by investors can actually be that tool that can help people retire early by saving early. But one has to be cautious with type of mutual fund schemes he/she chooses. To exploit the full potential of SIP one point is clear, that one has to start investing in SIP at a young age. As more the time, more the gains from the compounding effect.

Let us understand with an example:

As one SIP calculator shows that if one starts investing Rs 1,000 per month, then assuming a return of 10%, the amount at the end of 20 years, this investor would get is Rs 7,18,259 due to the compounding effect.

Now, we will try show the power of investing an SIP at an early age. According to another SIP calculator, if a 25-year-old starts an SIP of Rs 5,000 per month, then assuming 12% return, the investor would have Rs 2.76 cr when he retires at 60. While another person who starts investing at the age of 30 years would get Rs 1.54 cr at 60. Clearly, a gain of Rs 1.22 cr for starting early. Clearly, it’s a big-big advantage for early birds. From this example it clear, the delay in SIP could cost you the few crores.