Imagine you want to buy a toy that costs Rs. 500, but you only get Rs. 100 as your weekly allowance. You really want the toy, but you can’t afford it right now. So, what do you do? You save!
Every week, you put aside Rs. 100 from your allowance. After five weeks, you have saved enough money (Rs. 500) to buy the toy. This is similar to how a Systematic Investment Plan (SIP) works.
In a SIP, instead of saving your money in a piggy bank, you invest it in something called mutual funds (think of it as a big basket of many different investments like stocks or bonds). The cool thing about mutual funds is that they have the potential to grow your money over time.
So, with a SIP, you decide on a fixed amount (like your Rs. 100 weekly savings), and regularly invest that in a mutual fund (like saving for your toy). This could be every week, every month, or any time period that works for you.
The best part is, you can start a SIP with a small amount. Some places even let you start with as low as Rs. 100 per month! So even with a small allowance, you can start investing and growing your money.
You can start a Systematic Investment Plan (SIP) with an amount as low as Rs. 500. Some platforms even allow you to start with an amount as low as Rs. 100 per month. The idea is to start early and increase your investments as per your income levels and financial goals1. Remember, the key to building wealth is regularity and patience. Even small amounts invested consistently can grow to a substantial sum over time.