My blog primarily focuses on how to earn money. While I have written numerous articles about earning, it is equally important to learn how to invest that money wisely. In today’s article, I will discuss how to invest rs 500 per month and get ₹10 lakhs in 20 years.
I am not a financial expert or a stock advisor. Therefore, I will not be recommending any specific stocks or mutual funds here. Instead, I aim to provide a detailed understanding of how starting your investment journey can help you achieve this financial goal.
For those who earn a stable income, this article might not be for you. If someone earns ₹30,000–40,000 per month, they should ideally invest at least ₹5,000 every month. However, if you haven’t yet started investing in mutual funds or the stock market, this article can help you. Otherwise, this piece is primarily for students, individuals earning a minimal income, or those who have just started their earning journey. With this audience in mind, I have titled the article, how to invest rs 500 per month and get ₹10 lakhs in 20 years.
Also Read: How To Earn ₹1000 Daily Without Investment Online
Investing For Beginners in India
I’m not sure about other countries, but in our country, there’s a tendency to seek ways to become rich quickly. To be honest, this works only for those who teach you how to get rich quickly—those who learn it rarely become wealthy.
When someone first learns about investing, everything seems new to them—stock markets, mutual funds, sovereign gold bonds, IPOs, ETFs, trading, and more. In most cases, people profit when their money is invested for a long period. If you invest today and withdraw the money after just a few months, the chances of seeing significant returns are minimal. In fact, it might lead to losses. To see your money grow, you need to invest regularly over a long period, such as 5, 10, or even more years. Over time, through the power of compounding, your money will start earning for you.
Despite this, what attracts most people in our country today is trading. Trading can take various forms, such as intraday trading, options trading, currency trading, and more. To be honest, I don’t have much knowledge about trading, nor do I engage in it. However, I’ve observed that most young individuals are inclined toward trading because they believe it can make them millionaires overnight. This belief often stems from misinformation or limited knowledge, leading to significant losses or debt.
For all beginners, my suggestion is simple: if you want to save and grow your money, focus on investing, not trading. Those you see who have become wealthy through the stock market are mostly a result of investing.
How To Invest Rs 500 Per Month and Get ₹10 Lakhs
Is it really possible to accumulate ₹10 lakh in 20 years by investing just ₹500 per month? Yes, it is possible. However, this is achievable only when you follow a systematic approach and consistently invest every month. Let me explain how you can do it.
Some of you might wonder, “Just ₹10 lakh? What can I do with such a small amount?” The truth is, just as ₹10 lakh may seem small to you after 20 years, investing ₹500 per month might also seem insignificant.
I’m not trying to insult anyone. What I mean is, that as your income grows, adjust your monthly investment accordingly. This way, you’ll be able to build a substantial corpus over time.
Today, I will talk about a method called Mutual Funds. The advantage of mutual funds is that you don’t have to take on much headache. All you need to do is select a mutual fund and set a fixed amount to invest every month. Then, on a specific date each month, the designated amount will be automatically debited from your bank account and deposited into the mutual fund.
The rest of the responsibilities lie with the mutual fund manager and their team. You don’t need to worry about whether the market is going up or down, or which company your money is being invested in. Two or three experts will manage your and other investors’ money on behalf of the mutual fund.
This is the biggest benefit of mutual funds. The method of consistently investing a fixed amount every month is called SIP (Systematic Investment Plan).
Start Investing With ₹500/Month and Get ₹10 Lakhs in 20 Years
I am assuming that you have just started earning and have planned to invest Rs 500 per month through SIP. This is an excellent decision. There are various types of mutual funds, such as large-cap, mid-cap, small-cap, index funds, debt funds, tax-saving funds, etc.
None of us know which fund will deliver what percentage of returns in the future. However, based on records, it is generally observed that index funds have provided an average return of at least 12% annually.
Now, if you start saving ₹500 every month through an SIP in an index fund, it’s a great start. But continuing with the same amount year after year won’t suffice. You need to try to increase your savings a little every year.
Today’s income won’t remain the same 10 years from now. As the cost of living rises, so does income. Based on this principle, let’s assume you step up your SIP by 10% every year. This means if you invest ₹500 per month this year, you will invest ₹550 per month next year, and so on—10% more than the previous year.
Step Up SIP Calculator
Nowadays, you can find various SIP calculators and Step-Up SIP calculators on different websites. Using these tools, you can input your desired amount and start saving according to your future financial goals.
For instance, I used a Step-Up SIP calculator to calculate savings starting with ₹500 per month, increasing the amount annually by 10%, assuming a 12% return over 20 years. The results showed that while I only invested ₹3,43,650 in total, the value of my investment grew to ₹9,94,436. That’s an additional ₹6,50,786 earned through compounding. This is the magic of the power of compounding.
Now, if you had not increased your SIP by 10% annually and simply saved ₹500 every month for 20 years, you would have invested ₹1,20,000 in total, and your money would have grown to ₹4,99,574, earning ₹3,79,574 extra.
This difference illustrates why it’s crucial to save as much as possible and, if possible, increase your savings every year. By doing so, you allow your investments to grow into a larger corpus in the future.
What is SIP
SIP stands for Systematic Investment Plan. It is a process where we invest a fixed amount of money on a specific date every month. With SIP, we link a mutual fund with our bank account and set a specific date and amount for the investment. On the specified date, the set amount is automatically deducted from our bank account.
If, for some reason, there is an insufficient balance in our bank account on the designated date, the SIP will not be processed for that month. In such cases, we might incur a penalty or charge for the missed SIP.
What is Step Up SIP
The difference between SIP and Step-Up SIP lies in how the investment amount is managed:
- SIP (Systematic Investment Plan): In regular SIP, you invest a fixed amount every month on a specific date. The amount remains the same throughout the investment period unless you choose to change it manually.
- Step-Up SIP: In Step-Up SIP, you increase the investment amount at regular intervals, either annually or monthly, by a fixed percentage or amount. This helps to gradually grow your investment as your income increases or as you are more comfortable with contributing higher amounts.
In long-term investing, this difference becomes significant because Step-Up SIP allows for a higher compounding effect due to increased contributions over time, potentially yielding greater returns compared to regular SIP.
Final Thoughts
In today’s article, I have discussed investing and why everyone needs to start investing from a young age. Many people might think that their low income makes saving impossible. However, investing doesn’t mean that you need to save the same amount as your friend who is saving ₹10,000 a month. Investing is about saving according to your capability so that you can fulfil your dreams in the future.
This article specifically talks about how to invest rs 500 per month and get ₹10 lakhs in 20 years through Step-Up SIP. If you have a higher income and can afford to save ₹5000 instead of ₹500, try saving that amount so that your corpus grows more significantly. You can also use online SIP calculators to input your desired amount and see what your future financial goals can look like. Follow this website to read more articles like this one. Thanks for your time.
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