The most preferred plan would be to invest monthly to benefit from the market fluctuations.

It is possible to invest as small an amount of Rs.500/- a month. The longer one continues to invest, the higher the returns. Now let's see how this works.

Rs 1000/- is not such a big amount. Right?

Understanding SIP

Let us assume that you want to save for your children's education or marriage or for your own retirement.

If you were to save Rs.1000/- a month for the next 20 years, you would have saved Rs.2.40 lakhs.

Banks would have given a return of about 6.5%, and your savings would have grown to around Rs.4.90 lakhs.

The Power of Compounding

But if you were to save this amount in Mutual Funds through Systematic Investment Plan - SIP, your savings, even at a very conservative estimated return of 12%, would have grown to Rs. 10 lakhs. (It could be much more!)

If you continue your Rs.1000/- monthly investment in MF for just five more years, your total 3 lakhs rupees would have grown to 19 lakhs rupees. That's the power of compounding.