New Delhi: Investors do not always need to start with a large amount to build wealth. A Systematic Investment Plan (SIP) can be started with as little as ₹500 per month, allowing investors to invest regularly and benefit from long-term compounding. The Association of Mutual Funds in India (AMFI) confirms that SIPs can start from ₹500 per month.

For example, if an investor puts ₹500 every month into a market-linked mutual fund investment and the investment earns an assumed 12% annualised return, the corpus could reach approximately ₹20 lakh after around 32 years.

Over 32 years, the investor would contribute about ₹1.92 lakh, while the remaining amount would potentially come from investment growth and compounding.

The calculation is only an illustration. Mutual fund returns are not guaranteed, and actual returns can be higher or lower depending on market performance. AMFI notes that rupee-cost averaging does not assure profits or protect investors from losses.

Long-term investing can make a significant difference because returns generated on an investment can themselves generate further returns over time. AMFI highlights the importance of starting early and staying invested for the long term to benefit from compounding.

Investors can also consider increasing their SIP amount periodically as their income grows. A higher monthly contribution can help reach a financial target sooner, although the outcome will still depend on investment returns.

The key takeaway: Starting with ₹500 may look small, but consistent investing over several decades can potentially create a substantial corpus. Investors should consider their financial goals, investment horizon and risk tolerance before choosing a mutual fund scheme.