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Mutual fund calculator: How much SIP you need to invest to get 3 lakh monthly income

Mutual fund calculator: Keeping life expectancy post-retirement at 25 years and inflation at 6 per cent per annum, a person would require around  ₹7.2 crore fund to get  ₹3 lakh monthly income for next 25 years. (Reuters)Premium
Mutual fund calculator: Keeping life expectancy post-retirement at 25 years and inflation at 6 per cent per annum, a person would require around 7.2 crore fund to get 3 lakh monthly income for next 25 years. (Reuters)

  • Mutual fund calculator: If an investor has done mutual fund SIP for long-term, then mutual fund return calculator suggests that one can expect at least 10 per cent post-tax return on one's investment, say tax and investment expert

Mutual fund calculator: Systematic Investment Plan (SIP) is one of the most favoured mutual fund investments among the investors as it it allows wealth creation to those earning individuals who are nascent in their career and they don't have lump sum amount for investing. As per tx and investment experts, if an investor has done mutual fund SIP for long-term, then mutual fund return calculator suggests that one can expect at least 10 per cent post-tax return on one's investment. They also said that one can create post-retirement income through SIP investment as well. They said that, today a middle middle class person post-retirement requires around 40,000 to 45,000. But, after 30 years, this will go up to 3 lakh if the inflation is kept in mind. So, mutual fund SIP investment should be done keeping this monthly 3 lakh post-retirement income in mind.

Speaking on how much a person will require after 30 years to meet one's post-retirement requirements; Kartik Jhaveri, Director — Wealth Management at Transcend Cconsultants said, "Today, a middle middle class person needs around 40,000 to 45,000 to meet one's financial needs post-retirement. This will grow during the passé of time and hence to decide how much one would require after a certain period, it is advisable to keep 6 to 6.5 per cent inflation in mind. If we keep inflation to the tune of 6 to 6.5 per cent, this monthly 45,000 will go up to 2.97 or say 3 lakh. So, SIP has to be done in such a way to create a corpus that can help the investor meet this monthly 3 lakh income post-retirement."

On how much fund a person will require to meet one's monthly 3 lakh income post-retirement; Pankaj Mathpal, Founder & MD at Optima Money Managers said, "Keeping life expectancy post-retirement at 25 years and inflation at 6 per cent per annum, a person would require around 7.2 crore fund to get 3 lakh monthly income for next 25 years. For this, a person will need to invest 7.2 crore in SWP (Systematic Withdrawal Plan), where one would get at least 8 per cent return, which is 2 per cent higher than 6 per cent annual inflation."

On how to achieve 7.2 crore investment goal Kartik Jhavri of Transcend Consultants said, "If a person starts investing in SIP at the age of 30, it has 30 years for investing. My suggestion to the investor is to keep increasing one's monthly SIP in sync with one's monthly income. If an investor increases its monthly SIP by 10 per cent per annum, it would become easy for the investor to achieve its investment goal as the monthly SIP at the beginning will become much lesser."

Keep mutual fund taxation in mind

On how much one can expect to get in return after investing for near 30 years in mutual fund SIP; SEBI registered tax and investment expert Jitendra Solanki said, "One can expect at least 12 per cent over all return or 10 per cent post-tax return on one's investment in such a long-term time horizon." Solanki said that while investing, keeping income tax payable at the time of redemption should also be kept in mind.

Photo: Courtesy Piggy mutual fund calculator
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Photo: Courtesy Piggy mutual fund calculator

So, assuming 12 per cent overall return or 10 per cent post-tax return on one's monthly SIP for 30 years to meet 7.2 crore retirement fund creation, the mutual fund return calculator suggests that one needs to create 9.61 crore corpuses that would become 7.23 crore post-tax payments.

Photo: Courtesy Piggy mutual fund calculator
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Photo: Courtesy Piggy mutual fund calculator

As per the mutual fund calculator, one needs to start mutual fund monthly SIP of 12,000 with 10 per cent annual step-up strategy for next 30 years to meet this 3 lakh monthly income for next 25 years post-retirement.

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