Micro-SIPs:

There’s a profound saying, ‘Growth is growth, no matter how small.’ It applies to every aspect of life, and that includes even investments. When we talk about investment, the first thing people think of is a large corpus, which can be a deterrent if you don’t have the means to make large payments. However, with the changing ecosystem of investment, micro-SIPs have gained a lot of traction, especially among first-time young investors.

What are Micro SIPs

A Micro-SIP is a systematic investment plan that allows participants to deposit as little as ₹100 per month to mutual funds. It's intended for newbies, low-income individuals, and anyone wishing to test the waters without taking on too much risk. Usually, the lowest SIPs were ₹500 per month, but thanks to digital accessibility and financial inclusivity, lot of fund houses that introduced micro-SIPs at ₹100.

What Makes Them Special?

Your first investment, whether big or small, is always special. However, there are several reasons why Micro SIPs are a great way to get started:

Effect of Compounding

Irrespective of how small or big your corpus is, your investments get the benefit of compounding interest. For the uninitiated, compound interest is when your principal and interest component earn interest over the investment period.

For example:

Monthly Investment - ₹100

Investment period - 25 years

Estimated Interest -12%

Total Investment - ₹ 30,000

Estimated Value - ₹ 1,89,764

Estimated Earnings - ₹1,59,764

**The calculations provided above are based on assumed rate of returns and it are meant for illustration purposes only.

So, just by making small but consistent payments, your initial investment will grow significantly due to the power of compounding.

Professional fund management

You can choose from the best-performing mutual funds to invest your money.

Start Small

With the entry barrier of ₹100, even a low wage individual can start their investment journey. This also allows students to save from their pocket money.

Build Financial Discipline

Investing small amounts consistently fosters a saving habit, which will build financial discipline in the long run.

How to Make Most of Micro SIPs

To make the most of your Micro SIP

• Invest in direct funds, so you have a lower expense ratio

• Choose an annual step-up plan. Even increasing as low as ₹50 every six months or annually will majorly impact your returns.

• Stay consistent to benefit from compounding interest

Conclusion

If you are someone looking forward to starting your investment journey but don’t have much to spare, a Micro SIP is perfect for you. It may not help you achieve your major goals in the short term, but with timely payments, consistency, and annual step-up plans, you will be surprised at how much you can achieve. And though it seems like a small amount now, your future self will thank you immensely.

**SIP does not assure a profit or guarantee protection against loss in a declining market. The illustration mentioned above is not based on any judgements of the future return of the debt and equity markets / sectors or of any individual security and should not be construed as promise on minimum returns and / or safeguard of capital. Information gathered and material used in the above illustration is believed to be from reliable sources. ABSLAMC however does not warrant the accuracy, reasonableness and / or completeness of any such information. The illustration do not purport to represent the performance of any security or investments. Nothing contained herein shall amount to an offer, invitation, advertisement, promotion or sponsor of any product or services. In view of individual nature of tax consequences, each investor is advised to consult his / her own professional tax advisor before taking any investment decision.

An Investor education and Awareness initiative of Aditya Birla Sun Life Mutual Fund

All investors have to go through a one-time KYC (Know Your Customer) process. Investors to invest only with SEBI registered Mutual Funds. For further information on KYC, list of SEBI registered Mutual Funds and redressal of complaints including details about SEBI SCORES portal, visit link : https://mutualfund.adityabirlacapital.com/Investor-Education/education/kyc-and-redressal for further details.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully

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