Mutual Fund SIP: Mutual fund (MF) gross inflows via SIP surpassed Rs 20,000 crore for the first time in a calendar month, with investors opening a record 6.4 million SIP accounts despite a jump in market volatility. Last month’s (April’s) account openings were about 50 per cent higher than March’s registrations.
Mutual Fund SIP: A Systematic Investment Plan (SIP) is a type of mutual fund investment that differs from lump sum investments. Not everyone can invest in mutual funds in a single sum or aggregate amount, thus SIPs or periodic payments are a common option. SIP investing allows investors to invest a certain amount every month. One can start a SIP with as little as Rs 100 per month.
Mutual fund (MF) gross inflows via SIP surpassed Rs 20,000 crore for the first time in a calendar month, with investors opening a record 6.4 million SIP accounts despite a jump in market volatility. Last month’s (April’s) account openings were about 50 per cent higher than March’s registrations.
The monthly SIP contribution has increased from Rs 10,000 crore in September 2022 to Rs 20,000 crore in around one and a half years.
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How SIP works
A defined quantity of money is withdrawn from an investor’s bank account regularly (monthly, quarterly, etc.) and invested in a mutual fund of your choice through a SIP. The amount of units you purchase is determined by the mutual fund’s Net Asset Value (NAV) at the time of purchase. When NAVs are low, more units are issued, and when NAVs are high, fewer units are issued. This method, known as rupee cost averaging, can assist in reducing the impact of market volatility.
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Mutual Fund KYC
Recently, a new KYC rule was implemented. From April 1, 2024, mutual fund investors need to check their know-your-customer (KYC) status. As per the new rules, it has become necessary to get KYC done through Aadhaar and PAN. If the MF investor has done KYC using an Aadhaar card and PAN card, then his KYC status will be Validated. Only people with validated status can invest in all mutual funds.
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SIP calculation to accumulate Rs 3.5 corpus
Suppose, you start investing at the age of 20 when you start doing job. Investing Rs 1,000 per month should not be a big deal for anyone to save their future.
Now, if you invest Rs 1,000 in an MF SIP and get a 12 per cent return, you can become a crorepati at the age of 60. At a 12 per cent rate of return, a Rs 1,000 SIP may earn you Rs 1,14,00,000. This demonstrates the power of compounding.
Now, if you raise your SIP amount by 10 per cent each year, as your income grows with each passing year, this SIP over 40 years can generate a corpus of Rs 3.5 crore.
