How much SIP do you need to accumulate a corpus of ₹10 crore by the age of 60 years?

Starting long-term SIPs has always been beneficial for retirement planning. Long-term mutual fund investments are not just ideal for long-term objectives like retirement; they also provide other advantages including tax savings, the power of compounding, less risk from short-term market highs and lows, the ability to produce returns that outperform inflation, and more. Here, we're talking about investors who want to start SIPs for their retirements, and for that reason, we've picked an example of how much SIP you need to make in order to have a corpus of Rs. 10 Cr. by the time you're 60 years old. Now, let's hear from some experts on the subject.

Juzer Gabajiwala- Director, Ventura Securities

To accumulate a corpus of Rs. 10 Cr at the age of 60, you need to make monthly investments as follows depending on your current age and risk appetite:

You can see that higher the years left to amass the corpus; lower the SIP amount. Thus, the earlier you start; better the compounding effect can work for you!

Below are the schemes which could be looked at in the below mentioned segments:

You may also look at multicap or flexi cap schemes if you seek to invest in multiple segments via single fund.

Nirav Karkera, Head of Research, Fisdom

For a younger 30-year old investor seeking a target of INR 10 Cr. by age 60, an SIP of ~INR 35,000 should help achieve such a target. This assumes that the investment grows at a pace of 12% annually. However, for an investor delaying such an investment by a decade, the monthly contribution required to achieve a similar corpus goes up by over 3x to a monthly SIP commitment of ~INR 1.2 Lakh to achieve a similar target. While it is difficult to predict or control performance of investments through the longer period, an investor must focus on maximising the two factors in control – invested period and amount invested.

The portfolio construct depends on the time, risk appetite and investment profile of the customer. However, investors with an investment time horizon of at least over five years and appetite for high volatility, must orient portfolios towards equities. Flexicap funds could be a good starting point. Funds like PPFAS Flexicap fund and Kotak Flexicap funds are good funds in the category. For longer tenures, investors could add midcap and smallcap funds to the mix. Kotak emerging equities fund, HDFC midcap opportunities fund, SBI smallcap fund and Kotak smallcap fund are promising funds in the category. Investors seeking lesser volatility along with risk-optimal returns could look at dynamic asset allocation funds like a combination of ICICI Balanced Advantage Fund and Edelweiss Balanced Advantage Fund.

Maitry Shah, founder of LakshMe

To calculate how much Systematic Investment Plan (SIP) is required to accumulate a corpus of Rs. 10 crore by the age of 60, we need to consider several factors such as:

> The current age of the person.

> The expected rate of return on the investment.

Let's assume that the person is currently 30 years old and wants to accumulate a corpus of Rs. 10 crore by the age of 60. Also, let's assume that the expected rate of return on the investment is 12% per annum.

So, the person has to invest around Rs. 1,75,000 per month through SIP at the age of 30 for the next 30 years to build the corpus of Rs. 10 crore. Some of the mutual funds, I would recommend:

1. Balanced funds: Balanced funds are mutual funds that invest in a mix of equity and debt securities, with a fixed asset allocation ratio that is maintained throughout the investment period. The asset allocation ratio of a balanced fund typically ranges from 60:40 to 80:20, with equity representing the higher portion of the allocation. The objective of balanced funds is to provide a balanced approach to investing, with a moderate level of risk and steady returns.

2. Dynamic asset allocation funds: Dynamic asset allocation funds are mutual funds that invest in a mix of equity and debt securities, but the asset allocation ratio is not fixed. The asset allocation ratio of a dynamic asset allocation fund is adjusted based on the market conditions and the fund manager's outlook on the market. The objective of dynamic asset allocation funds is to provide higher returns by taking advantage of market conditions and managing the risk by adjusting the asset allocation ratio.

3. Index funds: Index funds are a type of mutual fund that aim to replicate the performance of a specific market index, such as the S&P 500, the Nifty 50, or the BSE Sensex. Index funds invest in the same stocks or bonds that make up the underlying index in the same proportion as the index.

CA Manish Mishra, Virtual CFO

Assuming an annual inflation rate of 5%, investors would need to invest a monthly SIP of approximately ₹1,44,000 to accumulate a corpus of ₹10 Crores by the age of 60 years, assuming an annual return of 15%, an investment tenure of 30 years, and a current age of 30 years. It is important to note that actual returns may vary based on market conditions and other external factors.

To achieve this goal, investors can consider equity growth mutual fund schemes such as Mirae Asset Large Cap Fund, Axis Bluechip Fund, ICICI Prudential Bluechip Fund, SBI Bluechip Fund, HDFC Mid-Cap Opportunities Fund, Aditya Birla Sun Life Frontline Equity Fund, and Kotak Standard Multicap Fund, which have delivered consistent returns over the years. However, it is always advisable to consult a financial advisor before making any investment decisions.

Kabir Mehta : Operation & CFO at the Digital Futur

Investing your money requires a well-thought-out plan that is personalized to your financial goals. If you aim to save for a secure retirement, in addition to contributing to your EPF, VPF can be an excellent option to optimize your 80C savings. To determine the right amount for your VPF contribution, it's crucial to assess what's left in your 80C bucket. For example, if you earn INR 1 lakh per month, save around INR 67,000 in EPF annually, and have other 80C deductions worth INR 40,000, it's advisable to cover the remaining bucket with a monthly VPF contribution of INR 4,300.

To enhance your retirement planning strategy, it's essential to diversify your investment portfolio and consider factors such as risk tolerance, investment horizon, and financial goals. A well-balanced mix of savings, including EPF, VPF, NPS, and ELSS, can help ensure that you have enough corpus when the time comes. The best part is that all pension savings are exempt from taxes. Therefore, it's highly recommended that you carefully assess your objectives to make a personalized decision about where to invest your hard-earned money.

Additionally, it's crucial to keep track of your investment performance regularly and make adjustments as necessary to ensure you're on track to achieve your objectives. Seeking the advice of a financial expert can also be beneficial in making informed decisions about where to invest your money. By working with an experienced professional, you can gain valuable insights into market trends, investment opportunities, and risk management strategies.

Overall, approaching your investment decisions with careful consideration and thoughtful planning is essential. By taking the time to assess your objectives, diversify your portfolio, and seek expert advice, you can make informed decisions that will help you achieve your financial goals and secure a comfortable retirement. Remember that investing in your future is a lifelong process, and every step you take today can make a significant impact on your financial well-being in the future.