Gold Silver Reports — How can one become a crorepati? — It’s a question that remains dominant in the lives of almost all of us. That dream car, that dream house and that dream retirement eludes us all, but it shouldn’t.The answer to those dreams lies in the equity markets. To be more specific, the answer lies in Systematic Investment Planning (SIP) of your equity investments.
“Yes, if a retail investor invests in a diversified equity fund through a systematic investment plan over the long term, shehe can become a crorepati.For example, `20,000 invested through a monthly SIP for about 15 years can grow to over `1 crore, if you assume a rate of return of 12%,“ said Nimesh Shah, MD , ICICI Prudential AMC in an interview with ETMarkets.com.
A SIP is a financial planning tool offered by mutual funds that allows you invest small amount of money over a long period of time and use the power of compounding to generate hefty returns for your portfolio.
For becoming a crorepati, though, starting early with your SIP investment is paramount.
“One needs to start early . This will help the investor to avail the benefit of power of compounding. Due to power of compounding, especially over a long period of time, the difference between starting to invest early versus starting late can have a significant impact on your wealth,“ says Harsha Upadhyaya, chief investment officer Equity, Kotak Mahindra Asset Management Company .
Going about your SIP:
“Investors should first chalk out their long-term financial plans to identify how much MF investment needs to be made every month and what should be the debtequity allocation,“ says Gautam Sinha Roy, fund manager, Motilal Oswal AMC. With that through, the next step is to decide on the right fund house and fund manager.
Mix it up:
SIPs are not just about pouring all the money into the equity market. The mark of a great portfolio is the distribution of its risk and diversification. “One important element in investing in mutual funds is the asset allocation split between equity and debt. This needs to be reviewed every few years to see if the risk profile of the investor has changed and hence allocation split needs to be changed,“ Roy suggests. — Neal Bhai Reports
How Can One Become a Crorepati?