Table of Contents
What is a Mutual Fund?
How to invest in Mutual Fund
There are two ways through which you can invest in mutual fund.
- One Time/ Lump sum Investment
- SIP
You can choose lump sum investment or SIP investment as per your cash flow.
Lump sum investment
You can invest your money one time through the lump sum investment option.
In this, you need to deposit a common application form, and KYC form (link and detail given below), and a cheque.
You can start a Lump Sum investment as low as Rs 5000.
SIP Investment:
SIP stands for Systematic Investment Plan in which you have to pay a fixed amount (you choose amount) each month or each period (you choose).
If you do not want to invest a lump sum amount then you can start your investment periodically (say monthly) than SIP is the best option for you to invest in a mutual fund.
To know how to start an SIP: https://bestinvestindia.com/how-to-start-mutual-fund-sip/
If new to mutual funds https://bestinvestindia.com/mutual-fund-guide/
In this blog post, we will discuss what you can do with Rs 5000 SIP and how it works.
When you start a SIP, the biggest advantage is your freedom to start Its duration, date, and fund type.
For instance, let’s say Bestii Singh wants to invest every month for only 5 years but after the completion of 5 years he does not want to withdraw the money but to keep it for another 5/10/15/20 or any other duration for his future goals.
Now let’s say Bestii Singh can pay SIP 5000 per month for 10 years, but he wants to stay invested for another 10 years.
If he invests Rs 5000 monthly for 10 years and stays invested for another 15 years ( in total of 25 years)then his corpus size will grow to 34.82 lakh from 11.21 lakh.
Please note the calculation is for 25 years in total wherein he invests for the 10 years and stays invested for the next 15 years. Thus increase in the Corpus amount to Rs 61.37 lacs.
Can I become Crorepati with mutual funds?
However, if he makes a SIP of Rs 5000 for 26 years than his corpus will grow to 1 CR, and thus he will become a crorepati. These investments are calculated @12%, however in long run you may get better returns than this and thus you are a crorepati with SIP of 5000 only.
Frequently asked questions
Can we withdraw in between investments?
You can very well withdraw your money anytime in mutual funds there is no restriction on withdrawals. However, if you withdraw before the specified time then you may have to bear exit load and taxation over it.
What is the taxation if you withdraw from SIP
Each monthly payment is considered a fresh investment and thus taxed as per your holding period. Even exit load also depends on your type of fund and your holding period. To understand Taxation Please refer to the post:https://bestinvestindia.com/mutual-fund-taxation-fy-2019-20/
https://bestinvestindia.com/sip-taxation-how-sips-are-taxed/
Additional resources https://www.youtube.com/watch?v=KqxF84IPxNs&t=63s
Which fund should I invest for Rs 5000 SIP for 15 years?
You can choose Equity mutual funds for this matter. You can also invest in a combination of categories of equity mutual funds.
What is SIP in simple words?
SIP stands for systematic Investment Plan. In this plan you choose a fund, amount you wish to invest per month( minimum Rs 500/1000) and start your investment. First time, either you have to fill forms, sign and give a cheque to start the SIP or you can do it online also. From next month onwards your SIP amount start deducting automatically from your account.
How to start SIP?
To start your SIP investment, please read the post https://bestinvestindia.com/how-to-start-mutual-fund-sip/
How do SIP works?
To understand it practically, please consider watching this video
What is SIP || How SIP Works (Hindi)
.https://www.youtube.com/watch?v=DLuxFRopqeE&t=152s
What is the risk factor in SIP?
SIP in equity mutual fund might be risky but if you continue the SIP for long duration then most of the SIPs give good returns.
It is best to have regular portfolio review and invest as per your investing horizon and your requirements.
Mutual Funds are subject to market risk. To understand this market risk, Please refer to this video :
Mutual Funds are subject to market risk disclaimer in Hindi- meaning, definition and impact on you https://www.youtube.com/watch?v=L1kVgrkkLAo&t=121s
To read https://bestinvestindia.com/are-mutual-funds-safe/
What are the Benefits of SIP?
There are multiple benefits of starting a SIP in mutual funds. Please consider reading the posts.
SIP Pros & Cons – What YOU Must Know?
Difference Between SIP And Mutual Fund -Example
Mutual Funds Returns Calculator – How To Maximise Returns
Conclusion
Thus you can definitely become crorepati with SIP of 5000. You can start a SIP for 10 years, SIP for 20 years or more and become a crorepati.
There are many other ways also to become a crorepati. If you donot want to wait for too long than you can opt for alternative ways to become crorepati.
Let me know what do you think about it? Your views, your comments are very important to me.
You must have more questions about SIPs. Read More, Learn More
