Everyone saves a portion of their earnings and invests it somewhere where they get the maximum return on their investment. People save for their old age, while some make this type of investment to raise a large fund for their children. If you are also planning something similar, then the 21X10X12 formula can be very useful for you. If you invest under this, then your son will be a millionaire when he turns 21, tell us how this formula works…
SIP in MF will make you a millionaire!
All family members are worried about their children’s future and are trying to raise funds for everything from their education to marriage. Nowadays, investing in mutual funds can be a better option to fulfill the dream of making your child a millionaire. You can choose the option of SIP mutual fund or systematic investment plan to accumulate a big fund for kids. If we look at the performance history, a fund of more than Rs 1 million can be raised by saving just Rs 10,000 per month. On the occasion of Diwali, you can start this work and give a great gift to the child.
You will benefit from the power of compounding
Systematic Investment Plan (SIP) is a long-term investment process and the special thing is that along with strong returns, you also get the benefit of compounding if the investment is held for a long period. In any case, experts say that if you invest in the child’s future, the earlier you start, the more beneficial it will be for him. If we look at the returns received in SIPs, the returns of many SIPs have increased up to 20 per cent in the long run. On average, the rate of return ranges from 12 to 16 percent, which is helpful for accumulating a larger fund along with compounding.
How does this millionaire formula work?
Now let’s talk about the millionaire formula, through which your child can accumulate up to 2 million rupees at the age of 21 years. 21 in the 21X10X12 formula means that you will have to make SIP investments continuously for many years. 10 means that the SIP made by you will be Rs 10,000 per month and 12 means that if you earn 12 percent returns in 21 years, a fund of more than Rs 1 million will be accumulated for your child.
This is the calculation of savings and investment.
If you can easily understand the mathematics of this formula through the SIP Calculator, as soon as the child is born, his parents will have to make a SIP of Rs 10,000 per month and it will have to continue for 21 years. The total amount invested by you during this period will be Rs 25,20,000. Now let’s say you get an average return of 16 percent, not 20 percent. So in this case the return amount you will get will be Rs 1,81,19,345. According to this, your total fund will be Rs 2,06,39,345 in 21 years. However, even if only 12 per cent return is received in this period, the child will become a millionaire and the fund deposited for him during this period will be Rs 1,13,86,742.
(Note: Before making any type of investment, definitely consult your experts.)
