5000 Monthly SIP: Everyone wants to accumulate a good amount of money by old age so that life after retirement can be spent comfortably and happily. However, after taking care of family and personal expenses, by the end of the month a person is not able to save enough money to earn crores of rupees in the future. However, if savings are done wisely then what seems impossible can also become possible.

For whom is SIP a better option?

Systematic Investment Plan (SIP) of mutual fund can be a better investment option. Compared to other investment options of mutual funds, investing in SIP is easier and there is a higher possibility of getting returns in it. In such a situation, if you have regular income, then Systematic Investment Plan (SIP) is better for you. By continuously investing small amounts in SIP every month, you end up with a big fund in the long run. Through this, a good amount of money can be raised through continuous investment.

Understand the whole trick in this way

If you start your investment with a SIP of Rs 1000 every month and you get interest at the rate of 12% per annum on the deposited amount, then by 31 years you will have a fund of Rs 1.02 crore. Similarly, if you invest Rs 5000 in SIP every month and increase it at the rate of 10% every year and expect to get interest at the rate of 12% on the annual deposit, then with you for 25 years Rs 2,13,77,730 will be deposited. Of this, Rs 59,00,823 is the amount invested, while Rs 1,54,76,906 is the interest received on it.

At the same time, for 21 years, you will earn a huge income of up to Rs 1.16 crore with a monthly SIP of Rs 5000. Out of these, your total investment of Rs 38.40 lakh and return income is Rs 77.96 lakh. Even if you do a monthly SIP of Rs 2000 instead of Rs 5000, with a step up of 10%, you will accumulate a corpus of Rs 1.10 crore in the next 24 years.

However, the thing to keep in mind is that SIP will benefit you only if you stick with it for a long time. In case of market down, many people stop SIP and end up causing loss to themselves because on one hand, due to this, you are not able to get profit when the market is rising and on the other hand, you are not able to buy cheap units during the fall. Therefore, if you want to take full advantage of SIP, then continue with it till you achieve the target without stopping.

How to start?

• Before starting SIP, you have to decide how much money you want to invest every month and choose your SIP Amount accordingly.
• After this, select mutual funds based on your risk tolerance and financial goals.
• Also think for how long you want to invest the money, whether short-term, medium-term or long-term. After everything is finalized, now complete your KYC with PAN, Aadhaar and bank details.
• After this, auto-debit has to be allowed through e-Mandate so that the SIP money is automatically deducted from the account every month.
• You can choose your plan by visiting Groww, Paytm Money or Zerodha Coin or directly on the website of Mutual Fund House.
• Now you have to fill the SIP Registration Form first. In this you will have to provide many information like SIP Amount, Frequency Specified.
• With this your investment journey with SIP will begin.

Disclaimer: (The information provided here is being given for information only. It is important to mention here that investment in the market is subject to market risks. Always take expert advice before investing money as an investor. ABPLive.com never advises anyone to invest money here.)

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Mutual Funds are considered a smart and convenient option of investment, where your money is managed by expert fund managers. But do you know that some charges are also deducted from the amount you invested, which can affect your final return? It is not only necessary to understand these charges before investing, but also part of a better financial planning.

How does fund management happen?

When you invest in mutual funds, your money is assigned to the Asset Management Company (AMC). This company appoints a fund manager for the scheme, which with the help of an expert team analyzes the market and puts your money in different shares, bonds or other investment options. The entire process costs the cost, which AMC charges different types of fees from investors to complete it.

1. Entry Load

This is the fee that was earlier charged from investors while buying a unit of mutual funds. But the good news is that the Securities and Exchange Board of India (SEBI) has completely abolished the entry load on equity mutual funds in 2009. That is, now you do not have to pay any fee at the time of entering the fund.

2. Exit Load (Exit Load)

If you sell the mutual fund units before the scheduled time or redeem, then you may have to give exit load. This fee is levied by the Fund House so that investors remain invested for a long time. It changes on the basis of the scheme and can usually range from 0.25 percent to 4 percent.

3. Management Fee or Expense Ratio (Expense Ratio)

This is the most important fee that cannot be ignored. AMC charges this fee for the services of the fund manager and his team. It is called an expense ratio, which is a fixed percentage of the total investment amount on an annual basis. This fee is properly deducted every day by your total holding.

4. Account Fees

Some AMC also charges account fees from investors, especially when investors do not maintain minimum balance or SIP amount. This fee is reduced directly from the portfolio of the investor, so it is necessary to know and track it.

5. Service and distribution charges

AMC is also spent in works like marketing of its services, printing of documents, mailing etc. To make up for these expenses, service and distribution charges are levied.

6. Switch Fees

If you want to switch from one fund to another, then in some schemes you may have to pay switch fees. However, many schemes also provide this service free, so it is necessary to read its conditions before choosing the scheme.

It is important to understand every aspect

Before investing in mutual funds, not only returns, but also the charges associated with it should also be understood well. These fees affect your investment and with the correct information you can choose a better scheme. Read the scheme documents and fund factheets carefully before investing, so that you can decide more intelligently.

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