If you want to create a big fund through investment, then you have to keep some things in mind. First, remove from your mind that you do not have money left for investment right now. Most of the people are not able to start investing just because they feel that their earnings cannot be invested. They wait for the time to invest when they have enough money. This thinking stops you from starting to invest and building a bigger corpus in the long run. Let us know about some tips, using which you can create a fund worth lakhs and crores.
Start early and with small amount
Don’t wait for your income to increase to start investing. Start investing today with a small amount. You can start investing with a few thousand rupees every month. Equity scheme of mutual fund provides the facility of investment with SIP of Rs 1000 every month. You can start SIP in any top equity fund scheme. By selecting the auto-debit facility, the investment amount will be deducted from your savings account every month.
Compounding plays the biggest role in creating a big fund in the long run through investment. This means that you get a return on your investment, then you start getting returns on that return. With this, your money increases slowly in the beginning. But, later on it increases quite rapidly. With the power of compounding, a big fund can be created in the long run by starting with a small amount. However, for this you will have to be patient and trust the power of compounding.
Increase investment amount every year as income increases
Income generally increases with time. If you work, you get increment every year from the employer. Even if you are self-employed or do business, your income increases with time. You can increase the investment amount every year as your income increases. Increasing the investment amount by 10-15 percent every year can give you miraculous results in the long run.
Investing in high return investment options
You need to keep in mind that the average return of the investment option you are investing in should be higher than the retail inflation. You also have to understand the tax impact on his returns. Inflation and taxes on returns reduce the real return from investing in an asset. Therefore, it is important to invest in investment options with high returns. Only then will a big fund be created in the long run.
For example, an equity scheme of a mutual fund can provide an average return of 12 per cent per annum over the long term. But, around 7 percent return is available on bank fixed deposits. If you cannot take the risk of investing in shares, then you can invest in schemes like PPF, Sukanya Samriddhi.