SIP 20-20-20 investment formula: Invest Rs 7,300 annually and earn Rs 33.98 Lakhs | Here's how

A significant portion of the middle class is now investing in mutual funds.

Although financially risky, it has high profit potential. There are two main ways to invest in mutual funds. One is called lumpsum investment and the other is called Systematic Investment Plan or SIP.

What do the statistics say?

Many people invest in lumpsum. But many also invest through SIP. The total number of SIP subscribers in October 2024 was 10.12 crore. In November, it increased to 10.22 crore.

SIP's Assets Under Management (AUM) is 13.54 lakh crore rupees.

This data clearly shows the growing interest of small investors in the stock market. The biggest advantage of SIP is that it doesn't require a large sum of money. Because, you can start investing with just 20 rupees.

And the interest earned on SIP grows at a compound rate. As a result, investors have the opportunity to earn a substantial amount of money with a small investment.

According to SIP's 20-20-20 formula, the subscriber invests 7,300 rupees in the first year. He will increase the investment amount by 20% every year.

Experts believe that the subscriber can get about 14% interest per year on the relevant SIP. Large-cap mutual funds have given a total of 13-14% interest in the last decade.

Accordingly, the total investment of a subscriber in 20 years will be 13.44 lakh rupees. Therefore, at the end of the term, the interest on the relevant SIP will be 20.44 lakh rupees. So, an investor will get a total of 33.98 lakh rupees with interest.

On the other hand, there is also the facility of getting a large pension from SIP after retirement. Its regulatory body is the Pension Fund Regulatory and Development Authority or PFRDA.

Anyone can invest in this project if they want. Mainly, the central government has launched this project keeping in mind the social security of the citizens.

Disclaimer: Investing in the market is a risky matter. So always consult experts.