How To Become Rich Through Mutual Funds

Mutual funds are very easy tools of wealth creation in a period of time If you adopt a disciplined approach in mutual fund investing then you easily become rich in 10-20 year.

   Today I told you a tested method of wealth creation through mutual funds In this method you require one simple thing ‘’ SAVE 5% OF YOUR EARNINGS ‘’ it mean if your salary is 10000 per month then save only 5% of 10000 (500 rupees)in mutual fund SIP and increase this amount if your salary is increase. 

For example you start a SIP from 500 rupees per month and after 1 year your salary is 12000 rupees then your 5% saving is of 12000 means 600. 

So now increase your monthly SIP amount from 500 to 600 rupees per month. I think saving only 5 % from income is a very easy task it means if you earn 100 rupee then save 5 rupee and spent 95 rupee in your lifestyle maintenance. 

Now I give you a detail illustration that Mr shiv some Sharma was start his job in July 1996 in sale tax department as a clerk and that time his salary was INR 2500 per month. he start save only 5% amount of his salary ( it is INR 125 per month) so he make a SIP in SBI magnum multiplier lius plan 1993 ( this is a real story which inspire me to write this article). 

Now in 2014 he is a accountant and get 31000 per month salary so his salary in increase@15% per annum. He continue save 5% of his salary and invest this amount in above mutual fund scheme (in last of this article I give you a excel file where I show a estimated illustration.). 

SBI magnum multiplier plus give 21.24% annualized return on SIP investment if we divided it from 12 then monthly growth rate is 1.77% Now total value of his holding in near 7 lacks . Since last 18 year of his saving whenever he need money he take it as a loan from his own bank ( Yes he say this is my saving is my bank which give me interest free loan) In September 2004 he want to buy a bike and his holding cost is near 50,000 in September 2004 he sell some of his mutual fund units and get 30,000 ( in 2004 market price of a good bike is 30,000) for his bike. 

Now he assume that he take a interest free loan from his own bank he divided it in 60 installments 30000/60=500 per month now he add additional 500 in his monthly SIP amount means 5 % of his salary + 500 bike loan repaying amount. When he repay his bike loan from his mutual fund saving in September 2009 he again get a loan of 150000 from his saving and buy a residential plot from this 150000 and as I told you earlier he divided this 150000 from 60 as his loan installment 150000/60=2500 per month and repay this 150000 in 60 installments of INR 2500. 

Now his fund value is near 7 lacks and he plan to buy a Maruti swift car from taking a loan of 7 lacks from his own bank of this saving. 

It is also interesting to knew that market value of his residential plot is increase from 150000 to 10,00,000 in last 5 year which he buy from his mutual fund saving.

Here is the link for download estimated investment of shiv som sharma.

https://drive.google.com/file/d/0BwqVx444SxLaR0JhNGpzMDZTUjA/view?usp=sharing