If you want to meet your financial goals over the next 12 years by investing in mutual funds, it is imperative to maintain financial discipline.
The more focused you are on your financial goals and the timeline for achieving them, the easier it is to formulate a financial plan. Here, we assume that you aim to accumulate ₹50 lakh in the next 12 years. How much systematic investment plan (SIP) do you think you would need to do that?
Over a period of 12 years, you would need to invest anywhere between ₹22.5 lakh and ₹27.9 lakh, subject to the rate of return your investment earns. Here, we assume four different scenarios (for the sake of convenience), although the actual scenario could be different from any of the following.
Monthly SIP required to save ₹50 lakh
I. When the rate of return is 9%: When your investment gives you a return of 9% per annum, you would need an SIP of ₹19,401 a month for the next 12 years to save ₹50 lakh. Cumulatively, you would need to invest ₹27.94 lakh.
II. When the rate of return is 10%: When your investment delivers a return of 10% per annum, you would need an SIP of ₹18,087 (i.e., a total of ₹26.05 lakh) to be able to accumulate ₹50 lakh by December 2037.
III. When the rate of return is 11%: The SIP required would fall when your investment delivers a higher return of 11%. In this scenario, an average investor would need a monthly SIP of ₹16,844 (total of ₹24.26 lakh) to accumulate ₹50 lakh in the next 12 years.
IV. When the rate of return is 12%: Finally, in case you invest in a fund that delivers an annualised return of 12% in the next 12 years, you would need to invest a monthly SIP of ₹15,671 (i.e., a total of ₹22.57 lakh).
(Note: This story is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment-related decision.)
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