Everyone saves some part of their earnings and invests it in such a place where they get maximum returns on their investment. People do this saving for their old age, while some do this type of investment to raise a big 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 child will be a millionaire when he turns 21, let us know how this formula works…
SIP in MF will make a millionaire!
All the family members are worried about the future of their children and for this they try to arrange funds for everything from their education to marriage. In today’s time, investing in Mutual Funds can prove to be a better option to fulfill the dream of making your child a millionaire. You can choose the option of mutual fund SIP or systematic investment plan to accumulate a big fund for children. If we look at the history of returns, a fund of more than Rs 1 crore can be collected by saving just Rs 10,000 per month. On the occasion of Diwali, you can start this work and give a big 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 in it is that along with strong returns, one also gets the benefit of compounding if the investment is maintained for a long period. Anyway, experts say that if you are investing for the child’s future, then the earlier it is started, the more beneficial it will be for him. If we look at the returns received in SIP, the returns of many SIPs have been up to 20 percent in the long term. On an average, the rate of return ranges from 12 to 16 percent, which is helpful in accumulating a bigger fund along with compounding.
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How does this millionaire formula work?
Now let’s talk about the millionaire formula, through which your child can accumulate up to Rs 2 crore at the age of 21. 21 in the 21X10X12 formula means that you will have to make SIP investment continuously for so many years. 10 means that the SIP done by you will be of Rs 10,000 per month and 12 means that if you get 12 percent return in 21 years, then a fund of more than Rs 1 crore will be accumulated for your child.
This is the calculation of saving and investment
If you can easily understand the mathematics of this formula through SIP Calculator, then 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 be continued for 21 years. The total amount invested by you during this period will be Rs 25,20,000. Now let us assume that you get an average return of 16 percent, not 20 percent. So in this case the amount of return 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 percent 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 kind of investment, definitely take advice from your experts.)