Everyone wants that their future is secure and they have enough money in their pocket so that there is no need to worry. But if your monthly income is Rs 25,000, can you dream of becoming a millionaire? The answer is yes!

All you need is a little discipline, proper planning, and the habit of investing for a long time. This is not magic, but the wonder of smart investing. If you invest a small part of your earnings every month in the right place, then after years you can have so much money that you will be surprised.

Why is investment important?

First of all, understand that investing is the most important thing. No matter how much you earn, investing is necessary to secure your future. This is not just a way to add money, but it is also a way to fulfill your dreams and deal with the unexpected. If you save a part of your earnings every month and invest it in the right place, then your money can increase manifold with time. The special thing is that today there are many options available for low-income earners, in which investment can be started with a small amount.

Suppose, you earn Rs 25,000 every month. If you save 15-20% of this and invest, then this small start can give you big results. But the question is, where to invest? And how? Let's understand this step-by-step.

SIP will become your best friend
If you are new to the world of investment or your income is not much, then a Systematic Investment Plan i.e. SIP is the easiest and smartest option for you. SIP means that you invest a fixed amount in mutual funds every month. The best thing about it is that you do not have to invest a large lump sum amount in it. You can start SIP even with a small amount like Rs 500. That is, you can easily start investing even with a monthly income of Rs 25,000.

Investing in SIP is like filling a big piggy bank by putting in a little money every month. But the specialty of this piggy bank is that your money is not only deposited in it, but you also get interest on it, which keeps increasing with time. This is called the magic of compounding. The longer you invest, the more benefit you will get.

How much to save from an income of Rs 25,000?
Now the question is, if your monthly income is Rs 25,000, how much should you save? Financial experts believe that you should take out at least 15-20% of your income for investment. That is, if you are earning Rs 25,000, then it is possible to save Rs 3,000 to Rs 5,000 every month. But if your budget is a little tight, then you can start with Rs 4,000. This amount does not seem much, but if you invest it for a long time, the results will surprise you.

Suppose, you invest Rs 4,000 every month in SIP. Now keep doing this continuously for 30 years. During this time you have to maintain discipline, that is, you have to invest this amount every month without fail. Now see how this small amount can create a fund of crores for you.

Mathematics of becoming a millionaire in 30 years

Now let's understand some math. If you invest Rs 4,000 every month in SIP, then in 30 years you will invest a total of Rs 14,40,000 (4,000 x 12 months x 30 years). Now if your mutual fund gives an average return of 12% annually (which is common for good equity mutual funds in the long run), then after 30 years you will have Rs 1,23,23,893 i.e. about Rs 1.25 crore.

Out of this, your investment will be only Rs 14,40,000, and the remaining Rs 1,08,84,893 will come from interest only. This is the power of compounding. Your small savings grow so much over time that you can become a millionaire.

How to choose the right SIP?

Now the question is, which mutual fund should you choose? There are many mutual funds in the market, but you should choose the fund according to your needs and risk-taking ability. If you are investing for a long time, then equity mutual funds can be a good option, because they give good returns in the long run. But keep in mind, equity funds also carry risk, because they are affected by market fluctuations.

If you want to avoid risk, you can also choose balanced funds or debt funds, but their returns are usually less than equity funds. It would be better if you consult a financial advisor or research funds with good ratings. Mutual funds from some popular fund houses like SBI, HDFC, ICICI, or Kotak can be good options.

Disclaimer: This content has been sourced and edited from Amar Ujala. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.