When asked about the definition of “being rich,” many middle-class families point to having Rs 1 crore saved. This figure symbolizes security, stability, and success combined. While Rs 1 crore may seem like a significant amount, it is attainable through consistent investments in SIPs.
Systematic Investment Plans (SIPs) enable individuals to invest small sums regularly, which can gradually accumulate into substantial wealth. The key questions revolve around where to start, how much to invest, and which funds are most conducive to reaching the Rs 1 crore mark.
To shed light on these queries, Swapnil Aggarwal, Director at VSRK Capital, provided practical insights for those embarking on their investment journey.
Commence with Modesty; Understand Your Financial Parameters
Aggarwal emphasizes that for novice investors, the initial step is straightforward: assess your monthly saving capacity.
“For individuals new to investing, the easiest way to initiate an SIP is by first evaluating their monthly expenses and future financial objectives. Once they determine the amount they can comfortably save each month, they can commence a small SIP accordingly. It is crucial to start with an amount that does not strain their finances, gradually increasing it as their income rises and goals become clearer,” he advised.
This implies that commencing with a small SIP is sufficient to kickstart the investment journey, provided consistency is maintained.
Optimal Investment Percentage of Your Salary
While many seek a definitive rule, Aggarwal suggests that there is no one-size-fits-all approach.
“There is no fixed rule dictating how much one should invest from their monthly income, as most individuals tend to invest whatever remains after expenses. However, the recommended method is to reverse this practice: save first, spend later,” he elaborated.
He further recommends aiming to invest at least 25–30% of your earnings into systematic investments, if feasible. This habit fosters long-term wealth accumulation and enhances financial stability.
Single SIP or Multiple SIPs?
Aggarwal advises beginners to avoid having too many funds to prevent confusion and offers a practical approach.
“Novice investors can start with multiple SIPs, but it is advisable to limit them to a portfolio of 2–4 funds. Investing in an excess of funds can lead to over-diversification, potentially diluting returns,” he highlighted.
Maintaining a balanced fund mix ensures diversification without sacrificing growth opportunities, facilitating consistent wealth generation.
Optimal Funds for Long-Term Wealth Accumulation
For individuals planning investments spanning 10–20 years, Aggarwal recommends considering equity funds.
“Equity mutual funds are the most suitable choice for long-term SIPs. While each fund category has its advantages, those aiming for investments over 15–20 years should explore small-cap and mid-cap funds. These categories