How can a person become a crorepati before 35 through SIP?
Becoming a crorepati is a dream for many, and achieving it before the age of 35 is even more remarkable. While it may seem like an impossible task, a well-planned investment strategy can make it a reality. According to a report by NDTV Profit, a person can accumulate ₹1 crore before 35 through a step-up Systematic Investment Plan (SIP) starting at ₹25,000 per month. In this blog post, we will explore how this is possible and what it takes to become a crorepati before 35 through SIP.
The Power of SIP
A Systematic Investment Plan (SIP) is a disciplined investment approach where a fixed amount of money is invested at regular intervals, usually monthly. This approach helps in averaging out the market fluctuations, reducing the impact of market volatility, and increasing the potential for long-term growth. SIPs are a popular investment option for many, as they allow individuals to invest a fixed amount of money regularly, making it easier to manage their finances.
The Step-up SIP Strategy
The step-up SIP strategy involves increasing the investment amount at regular intervals, usually annually. This approach helps in accelerating the wealth creation process, as the increased investment amount is invested for a longer duration, thereby benefiting from the power of compounding. In the case of becoming a crorepati before 35, the step-up SIP strategy involves starting with an investment of ₹25,000 per month at the age of 24 and increasing it by 10% annually for a duration of 11 years.
The Calculation
Let’s take a closer look at the calculation to understand how this strategy can help accumulate ₹1 crore before 35. Assuming an annual growth rate of 12%, the estimated returns on the invested amount of ₹55 lakh will be around ₹47 lakh. This means that the total amount accumulated will be ₹1.02 crore, which is more than the target of ₹1 crore.
The calculation is based on the following assumptions:
- Starting age: 24 years
- Starting investment: ₹25,000 per month
- Annual increase: 10%
- Investment duration: 11 years
- Annual growth rate: 12%
The Benefits of Starting Early
Starting early is one of the key benefits of this strategy. By starting at the age of 24, the individual has a longer investment horizon, which allows them to benefit from the power of compounding. Even a small increase in the investment amount can make a significant difference in the long run, as the invested amount has more time to grow.
The Importance of Discipline
Discipline is another crucial aspect of this strategy. The individual must be disciplined enough to invest a fixed amount of money regularly, without missing any installments. This discipline helps in developing a habit of saving and investing, which is essential for long-term financial success.
The Role of Compounding
Compounding plays a significant role in this strategy, as it helps in accelerating the wealth creation process. The invested amount earns interest, and the interest earned also earns interest, resulting in a snowball effect. This effect helps in increasing the investment amount exponentially, leading to a significant accumulation of wealth over time.
Conclusion
Becoming a crorepati before 35 is a challenging task, but it is possible with a well-planned investment strategy. The step-up SIP strategy, starting at ₹25,000 per month, can help accumulate ₹1 crore before 35, assuming an annual growth rate of 12%. The key to success lies in starting early, being disciplined, and benefiting from the power of compounding. By following this strategy, individuals can achieve their financial goals and become crorepati before 35.
News Source: https://www.ndtvprofit.com/amp/personal-finance/rs-25000-sip-can-you-become-a-crorepati-before-35
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