What Is A Micro SIP? Should Senior Citizens Invest In Them?

Systematic Investment Plans (SIPs) are popular mutual fund investment toolsto help people achieve financial goals at different stages of their lives. They also help them grow as disciplined investors to build wealth for the long term. Unlike regular SIPs, micro SIPs allow people to invest as little as Rs 250 towards their monthly contributions, allowing low-income people like daily wage earners, homemakers, and senior citizens with limited income to participate.

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Small Investments, Big Returns

Even small investments can make a big difference to the corpus in the long run as these monthly contributions get compounded over time. Hence, one doesn’t have to wait to access big funds or a major financial windfall to invest in the market. For example, if one invests Rs 250 monthly in a Micro SIP for 25 years. In that case, the total investment will be Rs 75,000. With an expected annual return of 14 per cent, the corpus will grow to approximately Rs 6 lakh. It is a significant sum vis-a-vis the principal amount and can be used during retirement or medical emergencies.

Benefits of Micro SIPs

Benefit Of Rupee Cost Averaging: Investing in mutual funds will help mitigate market volatility and other risks, thus safeguarding your finances from major losses and easily navigating the market.

Affordability: With a monthly investment of as low as Rs. 250, even those below the poverty line can start their investment journey. This affordability will empower them to save small and build a substantial financial cushion for unpredictable situations like job loss, medical emergency, or retirement. It fosters financial independence in their later years, reducing their reliance on social security or welfare schemes that offer only the bare minimum.

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Compounding Benefit: Instead of investing a large sum for a short period and earning limited interest, consider the long-term benefits of investing small amounts over an extended period. This approach allows you to accumulate interest through the power of compounding, potentially leading to significant returns on your investment.

Realisable Goals: Micro SIP helps senior citizens realise small goals. It allows low-income people to be financially included, helping them set achievable goals for different purposes. It will even allow students to save up for higher education and vocational courses and investors to diversify their portfolios for emergency and retirement funds.