If you are also dreaming of becoming a millionaire by saving a small amount every month, then SIP i.e. Systematic Investment Plan can be a good option for you. Many people believe that to create a corpus of Rs 1 crore, a big salary or a huge lump sum investment is necessary. But in the long run even a small amount can achieve a big goal. Compounding plays the most important role in this. In such a situation, let us tell you today that if you invest Rs 5000 every month, then in how many days will you become Rs 1 crore and what is the right way to invest this.

When will a SIP of Rs 5000 turn into Rs 1 crore?

According to SIP calculation, if an investor invests Rs 5000 every month and gets an average annual return of 12 percent, then it may take about 26 to 27 lakh years to build a fund of Rs 1 crore. The total investment during this period will be around Rs 15.60 to 16.20 lakh. Whereas due to compounding, the total fund can be more than Rs 1 crore, that is, the real miracle is the return on return.

How does compounding make a great fund?

In the initial years of investment, the growth in compounding is slow, but with time the returns also start increasing. At the same time, the value of investment increases rapidly in the last few years. This is the reason why it is considered very important to stay in SIP for a long time. Stopping investment midway can affect bigger targets. Whereas equity mutual funds have given an average return of 11 to 13 percent in the long run. However, this return depends on the market and is not guaranteed. Investors who continue SIP even during market fluctuations can get good results in the long run.

How to invest Rs 5000?

Experts believe that instead of investing the entire amount in one fund, it is better to divide it into two parts. For example, Rs 3000 can be invested in index fund and Rs 2000 in flexi cap fund. This maintains balance in the portfolio and reduces risk. If an investor wants a combination of equity and debt, then hybrid fund can also be a good option. If the investor increases his SIP by 10 percent every year, then the target of Rs 1 crore can be achieved quickly. Increasing investment as income increases makes a big difference in the long run. Apart from this, experts say that invest in equity only when your target is at least 5 years or more. While closing SIP when the market falls is considered a big mistake, funds with high expense ratio should be avoided.

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