Investing is usually put on hold by many individuals due to their perception that it requires a substantial sum of money. However, what if one had to begin investing with just ₹5,000 each month?
This is precisely the concept underlying the ₹5,000 SIP challenge. It means that one does not wait until he has enough to begin investing but begins small and keeps investing and allows his money to grow.
For all those who wish to invest in Chandigarh, Mohali, Panchkula and across India, a SIP of ₹5,000 each month is a good starting point.
What Is a ₹5000 SIP?
A Systematic Investment Plan is where you invest a certain sum of money systematically in a mutual fund scheme. If you invest through a SIP of ₹5,000, you will invest ₹5,000 every month, instead of arranging a huge lump sum at once.
Over a period of time, your investment amount becomes quite substantial.
| Investment Period | Monthly SIP | Amount Invested in Total |
| 5 Years | ₹5,000 | ₹3,00,000 |
| 10 Years | ₹5,000 | ₹6,00,000 |
| 15 Years | ₹5,000 | ₹9,00,000 |
| 20 Years | ₹5,000 | ₹12,00,000 |
| 25 Years | ₹5,000 | ₹15,00,000 |
The above-mentioned numbers are just your investment amounts. Your investment value may be more or less based on the performance of the mutual fund.
The Real Power Is Time
A SIP worth ₹5,000 may seem small on a month-to-month basis but the major advantage may lie in being consistent and giving time.
To explain further, a SIP of ₹5,000 per month, assuming an annualized return of 12%, will be worth about:
10 years: ₹11.6 lacs
15 years: ₹25.2 lacs
20 years: ₹49.5 lacs
25 years: ₹94.9 lacs
These are illustrative examples and do not guarantee any returns as mutual funds are subject to market-linked risks.
The above example is a classic example of how an investor needs to start early.
What If You Increase Your SIP?
It is not necessary for the ₹5,000 SIP to always stay ₹5000 SIP.
As your salary or the income of your business rises, you may think about raising the amount that you are contributing as SIP.
This strategy is widely referred to as the step-up SIP strategy.
An example of such would be SIP of ₹5,000 that you may raise after some period of time.
₹5000 SIP: What Can It Help You Achieve?
An investment of ₹5,000 through SIP could be used to achieve the following long term goals, amongst others:
- Long term wealth creation
- Creation of retirement fund
- Providing for children’s education
- Funding a home purchase in the future
- Formation of an investing habit
- Achieving other long term financial goals.
The appropriateness of an SIP would depend on the financial position, time frame and risk profile of the investor.
Don’t Focus Only on the Amount
The most common misconception that beginners hold is “₹5,000 is not enough.”
Rather than focusing on that, try asking yourself these three questions:
How soon can I start?
The sooner you start, the more time you give yourself.
How consistently can I invest?
Consistent investments can help create financial discipline.
Can I scale up my investment over time?
An increase in SIP over time, along with an increase in income, can help create wealth faster.
Sometimes, it is better to begin small than to always wait for the perfect opportunity to start investing.
Should Everyone Start a ₹5000 SIP?
Not always necessary. The SIP investment depends on your income, expenditure, emergency fund, investment and other financial requirements and goals.
It becomes essential to know about the mutual fund scheme, risks involved in the scheme and whether it is compatible with your investment goal before investment.
An investment advisory in Chandigarh or a mutual fund advisory in Chandigarh will guide you about your financial goals and investment options.
If an investor wants financial planning, wealth management or retirement planning, then SIP can be thought of as one part of the plan.
Start Small. Stay Consistent. Think Long Term.
This ₹5,000 SIP plan is not actually about ₹5,000. It is all about altering your mindset towards investments.
You do not necessarily have to start with a large sum. What you need is to create an investment habit in proportion to your financial ability and sufficient time for those investments to possibly grow.
Should you be willing to know more about the possible applications of SIPs to your finance, My Wealth Consultant will gladly assist you.
Plan Your Investments with My Wealth Consultant
MyWealthConsultant offers financial advice to individuals and families in Chandigarh, Mohali, Panchkula and Tricity.
No matter whether you are looking at your first SIP, planning for your retirement or building up wealth in the long term, professional advice will enable you to make smarter financial decisions.
Start Small. Invest Consistently. Build For The Future.
Disclaimer: Mutual Fund investments are subject to market risks. Read all scheme-related documents carefully before investing. The return calculations used in this article are illustrative and based on an assumed rate; actual returns may be higher or lower. This content is for educational purposes only and should not be considered personalised investment advice.
FAQs
Yes. There are various mutual fund schemes which allow SIP starting from a fairly low figure. But what SIP amount should be chosen depends on several factors like income, objectives and expenses of an investor.
If you make a monthly investment of ₹5,000 in 10 years then your total investment will amount to ₹6 lakh. The actual value will depend on the performance of the chosen mutual fund.
₹12 lakh will be your total investment over a period of 20 years. Assuming an average annual rate of 12% your investment will be worth ₹49.5 lakh approximately.
SIP is just a mode of investing, but not a safe one as such. The risk factor varies depending upon the scheme of mutual fund that you select.
When your income increases and you have the ability to invest more money, you can think of increasing your SIP periodically.
Yes, SIP can be a part of your retirement savings plan. The amount of money required will depend upon your age, retirement age, expenditure requirements and expected inflation rate.
Think about your financial objective, time frame, risk-taking attitude and nature of the mutual fund scheme.
