How can a fund of ₹ 18,000 make a fund of ₹ 3 crore? Learn complete mathematics:

Financial planning:Retirement! This is a word that a picture of a comfortable and worry -free life emerges in our mind as soon as we think about. But what is the most important thing to convert this dream into reality is – A big retirement fundOften people think that making crores of funds is just the work of the rich. But what if we tell you such a simple and magical formula, so that even a common job person till his retirement ₹ 3 Crore Can you deposit a huge amount like?

It is not a proven and powerful rule of a financial planning, but a lottery ticket, but ’18 -12-25 ‘SIP Formula Known by the name of This formula is based on the ‘Power of Compounding’, which over time transforms your small investment into a huge assets.

So let’s open the layers of this magical formula today and understand how you can also make a way to your financial freedom by using it.

What is SIP and how does compounding work?

Before understanding this formula, it is very important to know these two things:

• SIP (Systematic Investment Plan): This is a way to invest in mutual funds, in which you invest a certain amount every month. This is the best medium to increase your money in a disciplined way.
• Compounding (compound): It is also called the eighth wonder of the world. This means that you not only get returns on your original investment, but also get returns on that return. Over time, this effect increases like a snowball, and your money increases rapidly.

What is magic ’18 -12-25 ‘sip formula? (The magic formula explained)

This formula is divided into three easy parts, which prepares the entire roadmap to reach your goal:

1. Eighteen (18) – Your Monthly Investment

• What is the plan?: According to this rule, you every month ₹ 18,000 Will have to start SIP.
• Why is this possible?: This amount may seem big at the first time but if you look at it with the goal of saving 20-30% of your income, then it is possible for many people of the middle income group. This is the first test of your financial discipline.

2. Twelve (12) – Estimated Annual Return

• What is the goal?: You have to choose a mutual fund that average in the long term Annual return of 12% (CAGR) Could give
• Is it real ?: Yes, it is completely real. Equity mutual funds, such as good large-caps, flexi-cap or index funds have historically given a return of 12% to 15% in a long period. The target of 12% is a safe and realistic estimate.

3. Twenty five (25) – Investment Time Duration

• How long?: You disciplinary this sip For 25 years Will have to continue without stopping.
• Why is this most important?: The ‘time’ is the most important component to work for the magic of compounding. The longer you will be invested, the faster your money will increase.

Now see the entire math of ₹ 3 crore

If you strictly follow this rule of ’18 -12-25 ‘, then the view of 25 years later will be like this:

• Your monthly sip: ₹ 18,000
• Investment duration: 25 years (300 months)
• Estimated return: 12% per year

Calculation:

• Your total invested amount: ₹ 18,000 x 300 months = ₹ 54,00,000 (Square lakh rupees)
• Your total fund after 25 years: ** ~ ₹ 3,41,89,847 ** (almost 3.42 crores!,

This is the real magic of compounding:
You have a total of your pocket ₹ 54 Lakh Apply, but the power of compounding you ₹ 2.87 crore Gave more wealth than more than! Your total fund will be more than your goal i.e. ₹ 3 crore.

How to start and what precautions should be taken?

• Start soon: The sooner you start, the less SIP you have to do to reach your goal. If you invest only 20 years instead of 25 years, then your fund only ₹ 1.79 crore Will be able to be made only. You will lose Rs 1.6 crore due to a delay of 5 years!
• Choose the right fund: Choose the right equity mutual funds according to your risk ability with the help of a good financial advisor.
• Discipline is the key: Never stop your SIP in the middle by being afraid of market fluctuations.
• Use step-up sip: If possible, increase your SIP amount by 5-10% every year. By doing this, you can reach your goal even more quickly or make even bigger funds.

This formula teaches us that it is not difficult to achieve financial freedom; Just the right knowledge, discipline and need to start quickly ਹੈ.

(Disclaimer: Investment in mutual funds is subject to market risks. This article is only for educational objective. There is no guarantee of returns and 12% estimate is based on historical performance, which may vary in future. Please consult your financial advisor before investing.)