Mutual Fund Calculator: Systematic Investment Plan (SIP) is one of the most popular investment instruments among Indian millennials as mutual fund SIPs allow an investor to accumulate large sums of money with small monthly investments. According to tax and investment experts, mutual fund SIP investments for a long period allow an investor to get compound benefits by earning interest on interest which helps in maximizing the return on one’s money. However, he advised investors to increase their monthly investments by using annual step-ups in SIPs. He said that the annual increase in monthly SIP helps the investor to attain more financial independence after retirement.
Mutual Fund Return Calculator
According to tax and investment experts, if an investor invests 10,000 per month in mutual funds in SIP for 30 years, he can deposit approx. 127 crore at the time of maturity provided he has utilized 10 per cent annual step-up.
Speaking on Mutual Fund Investing; Jitendra Solanki, SEBI registered tax and investment expert said, “Mutual fund investments are subject to market risk, but in the long run this market risk is reduced and the potential for higher returns becomes very high. If one opts for SIP investment, then the investor can start with a small amount and accumulate a large amount over a long period of time.But, increasing the monthly SIP along with the increase in his annual income by using the annual step-up in the monthly SIP amount needed.”
What is the annual step-up one should choose while investing in SIP; Karthik Jhaveri, Director – Investments at Transcend Capital said, “The ideal practice is to step up one’s monthly SIP by 10 per cent annually as one’s annual income would increase by at least 10 per cent. Hence, increasing one’s monthly SIP along with the increase in monthly Income will not be a hectic task for an investor.”
Mutual funds can expect a long-term SIP investment of 30 years at an interest rate, Karthik Jhaveri said, “On long-term investments like 30 years or more, one can expect at least 12 per cent annualized return, which is Can go up to 16. Or can be even 17 per cent. On an average, one can expect around 15 per cent return on his mutual fund SIP investment for a long period of 30 years, provided the plan is chosen properly. “
Mutual Fund SIP Calculator
So, if an investor starts investing, assuming 15 percent return on monthly SIP 10,000 per month using a 10 percent annual step-up and he continues to invest for 30 years, the SIP calculator shows what one can expect to receive 12,69,88,106 or 12.70 crore maturity amount.
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Now the question is how to use it? 12.70 crores to live a post-retirement life with more financial freedom? Tax and investment experts respond in SWP (Systematic Withdrawal Plan). He said that like SIP in the pre-retirement stage, one can opt for SWP in the post-retirement stage where putting in a lump sum helps in building regular monthly income.
How much monthly income can be expected after investment 12,69,88,106 in SWP; Vineet Khandare, CEO and Founder, MyFundBazaar, said, “For Investing 12.69 crore in SWP for 30 years, 8 per cent return per annum expected, can expect monthly income of approx. 9 lakhs.”
When asked about mutual fund SIP investment plans that can deliver 15 per cent annual returns over a long period, Vineet Khandare of MyFund Bazaar listed the following SIP schemes:
Small-cap funds: SBI Small Cap Fund – Regular Growth;
Mid Cap Funds: Aditya Birla Sun Life Mid Fund – Plan – Growth Regular Plan; And
Large-Cap Funds: HDFC Top 100 Fund – Regular Plan – Growth.
Disclaimer: The views and recommendations above are those of individual analysts or personal finance companies, not Mint.
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