Mutual Fund Calculator: 50 . But how much monthly SIP do you need to retire?

How Adarsh ​​Vinay can achieve his retirement goal; Pankaj Mathpal, Founder and MD, Optima Money Managers said, “For a middle class family man, 60,000 is enough to meet one’s monthly financial requirement after retirement. However, if an investor is planning to retire 25 years from now, the current 60,000 per month will not be enough for him as inflation will also increase during this period. Taking into account the 6.5 per cent average inflation for the next 25 years, this 60,000 monthly requirement after retirement will be approx. 3 lakhs. Hence, one needs to accumulate enough retirement funds that can help him get 3 lakh per month with 6.5 per cent inflation adjusted after retirement.”

Pankaj Mathpal said that inflation will continue to rise after the retirement of the investor and hence the investor needs to develop sufficient funds which can help him in bringing in the money. 3 lakh monthly income adjusted after retirement with 6.5 percent annual inflation. He added that the fund will have to re-invest in SWP (Systematic Withdrawal Plan) as it will yield a return of around 8 per cent, beating an average annual inflation of 6.5 per cent per annum.

When asked about the funds required after 25 years to meet this retirement goal, Pankaj Mathpal of Optima Money Managers said, “Assuming a return of 8 per cent per annum on investment and 6.5 per cent annual rate of inflation, approximately 8.82 crore will be needed to adjust the monthly pension of dearness 3 lakh per month.”

On investment tools that can help an investor accomplish this 8.82 crore investment target in 25 years; Vineet Khandare, CEO and Founder, MyFundBazaar India Private Limited said, “Equity Mutual Funds can be a good option for the investor if he/she is averse to investing directly in the stock markets. The 15 x 15 x 15 rule of mutual funds shows that That one can expect to get 15 per cent return on one’s equity mutual fund investments, if the time frame is 15 years or more.” However, he advised investors to increase their annual SIP by 15 per cent as they plan to retire at the age of 50.

Mutual Fund Return Calculator

Assuming 15 per cent return on mutual fund equity investments for 25 years in mutual fund SIPs while maintaining a 15 per cent annual SIP step-up, the mutual fund SIP calculator suggests that the investor needs to start with a monthly SIP 9,500. This will enable the investor to deposit 8.85 crores.

When asked about mutual fund SIPs that can give 15 per cent returns, Pankaj Mathpal of Optima Money Managers listed the following mutual fund schemes:

1]Nippon India Flexi Cap Fund;

2]Aditya Birla Sun Life Equity Advantage Fund;

3]ICICI Prudential MNC Fund;

4]Canara Robeco Flexi Cap.

On SWP which can give 8 per cent annual return Vineet Khandare of MyFundBazaar India listed the following schemes:

1]ABSL Low Duration Fund;

2]HDFC Ultra Short Term Fund; And

3]SBI Savings Fund.

Disclaimer: The views and recommendations above are those of individual analysts or wealth management companies, not Mint.