Buying a car is a common dream for many middle-class families. However, not everyone has enough funds available, leading many to consider taking out a loan. While loans can provide the necessary funds, they also come with the stress of repayment. Fortunately, there are innovative strategies to purchase a car worth 10 lakh without the burdens of a loan. This article will explore an effective investment approach using SIP (Systematic Investment Plan) that can help you make this dream a reality.
Understanding Systematic Investment Plans (SIP)
In today’s world, essentials like food, clothing, and housing are vital, but having a vehicle and internet access are becoming increasingly important. With the rapid launch of new cars boasting excellent features, considering SIP as a feasible alternative to loans is a wise choice. Let’s delve into how you can effectively save towards purchasing your dream car.
How Much Should You Invest Every Day?
To accumulate the nearly 10 lakh required for your desired car, an investment of about ₹10,000 per month through SIP is recommended. Over a period of 6 years, this plan can allow you to save more than ₹10 lakh. Though returns on SIP investments are not fixed, historical trends suggest that investing routinely can yield significant cumulative returns.
Breaking Down the Numbers
Let’s break down the calculations involved:
Monthly SIP Calculation
For a car costing ₹10 lakh, setting aside ₹10,000 monthly can lead to substantial savings over time. Over 6 years (or 72 months), your total investment will amount to ₹7,20,000. However, it is important to remember that the actual returns can fluctuate based on market conditions.
Expected Returns on Investment
Considering a conservative estimated annual return of around 12%, which is considered the baseline for SIPs, you could expect to earn approximately ₹3,37,570 in interest over the 6-year period. Thus, your total funds available for the car could exceed ₹10,57,570 – impressively surpassing the initial target of ₹10 lakh.
A Faster Route to Your Dream Car
If you wish to expedite your savings, commencing a monthly SIP of ₹12,500 could yield a greater amount in a shorter time frame. Within just 5 years, you could accumulate around ₹10,31,080, making it easier to purchase your preferred vehicle without the hassle of loans. This strategy proves to be an optimal deal, making your aspiration of owning a car more tangible.
Final Thoughts
Investing through a SIP not only empowers you to save for a car without bearing the stresses of a loan but also encourages disciplined financial habits. By employing this strategy diligently, you can transform your dream of owning a car into reality, ensuring you enjoy the financial freedom that comes with it.