How to Start Investing in Mutual Funds with ₹10,000 to Earn ₹1 Lakh Per Year
How to Start Investing In Mutual Funds With 10,000 To Earn 1 Lakh A Year?
Investing in mutual funds is an excellent choice to increase your income in the future. In case you have 10,000 Rupees and wish to earn 1 Lakh per year, it is vital to know how mutual funds operate and the necessary strategies involved.
Let’s go through it step-by-step.
1.Understand Your Goal
Set to earn 1 lakh per year means you need a return of approximately 900 percent on your 10,000 Investing In Mutual Funds annually. This won’t be feasible with everyday mutual funds.
Most mutual funds yield 10 to 15 percent returns every year. Therefore, instead of expecting a 1 lakh return, you can focus on long-term investments.
2.Pick The Right Type Of Mutual Fund
Below are three popular types of mutual funds:
- Equity mutual funds: Higher risk/reward, ideal for long-term objectives
- Debt mutual funds: Low risk, reliable returns, ideal for short-term objectives
- Hybrid mutual funds: Equity and debt blend & moderate risk
If you prefer to wait out the recession and expect your investment levels to rise, go for equity mutual funds kasarong.com.
3.Begin a SIP (Systematic Investment Plan)
A SIP can be initiated with a minimum investment of ₹500 monthly. For your case, since you possess ₹10,000, you can:
- Invest ₹5,000 as a one time amount
- With the other ₹5,000, commence a monthly SIP of ₹1,000 for a duration of 5 months.
This investment approach instills the habit of consistent investing and builds discipline.
4.Reasonable Expectations of Returns
If you put in ₹10,000 as a mutual fund investment with an annual return rate of 12%, your fund would approximately grow to ₹11,200 after a year.
To achieve a 1 lakh return within the year, an asset investment of ₹8-9 lakhs will be required assuming a 12% return.
Therefore redirect these funds here instead of aiming for 1 lakh return yearly. Earmark 10,000 to begin with, and scale up the contribution monthly. That’s how wealth is built and sustained.
5.SIP Calculators and Applications
There are numerous applications such as:
- Groww
- Zerodha Coin
- Kuvera
- Paytm Money
They help in estimating prospective returns, enable fund comparisons, as well as simplify the investment process.
6.Maintain The Investment for A Longer Period
The optimal time frame to invest in mutual funds is 5-10 years or more when the funds perform best. These actions will aid in:
- Making regular incremental investments and
- Minimizing the frequency of withdrawals
- Reinvesting any profits along with dividends
All these measures will enable prime fund growth/compound growth yield.
FAQs
- Can I really start investing in mutual funds with just ₹10,000?
Absolutely, you can initiate with a lump sum of ₹10,000 or kick-off a SIP at just ₹500 a month. A lot of mutual funds accept low minimum investments.
- How much return can I expect from mutual funds in one year?
A large proportion of equity mutual funds pay out 10%-15% return annually, but these returns are highly dependent on the market and are not guaranteed.
- Is it safe to invest in mutual funds for beginners?
Yes, a mutual fund is safe as they are regulated by the SEBI and managed by skilled fund managers. However, investing depends on your goals and risk appetite.
- Which type of mutual fund is best for fast growth?
Equity mutual funds have the reputation for outperforming all other funds in the long term. But they do come with high risks compared to debt or hybrid funds.
- How long should I stay invested in mutual funds?
To maximize your returns, it’s best to hold an investment for 5-10 years, particularly in equity mutual funds. The longer you stay invested, the greater the chance of enhanced returns.
Final Words
Mutual funds is an ideal investment option to consider if you are starting with ₹10,000. However, expecting to make ₹1 lakh off of it annually is unreasonable for the time being. Instead, develop a monthly investing lifestyle, pick the right mutual fund, remain calm and allow time to do its magic.
Eventually, your small investments will yield substantial and bountiful returns over the long run.
Disclaimer
This article is meant for educational purposes only. Mutual funds and other collective investment schemes are subject to risks inherent to the securities markets. Carefully examine all documents pertaining to the scheme before making an investment. The anticipated returns stated should not be considered a promise or guarantee. Please seek the guidance of a certified financial advisor prior to taking any investment actions.
