Mutual Fund Calculator: Vijay Kumar Veeranve is a 25 year old professional whose take home salary is approx. 40,000 per month and has no loan to repay. He is looking for an investment tool that can help him accumulate around 11 crores when he turned 50. However, he does not want to invest directly in the stock market.
Speaking on whether Vijay’s investment target is viable or not; Karthik Jhaveri, Manager of Wealth at Transcend Capital said, “Since there is no financial burden on the investor like any loan repayment, deposits are possible. 11 crore in the next 25 years but it will require some punishment. Since, the investor is not in a mood to invest directly in the shares; Systematic Investment Plan (SIP) is the only other option in the equity mutual fund category which can give the kind of return that will help and accumulate investor 11 crore in the next 25 years. However, to keep the monthly SIP at the lowest level, annual step-up will have to be followed.
When asked about the annual step-up that would enable an investor to deposit 11 crore in 25 years; Sebi registered tax and investment expert Jitendra Solanki said, “The general practice is to maintain 10 per cent annual SIP step-up, but the investment target here is overly ambitious and hence, 15 per cent annual step-up would be safe.”
What is the return one can expect after investing in equity mutual funds for 25 years; Jitendra Solanki recalled the 15 x 15 x 15 rule of mutual funds which states that 15 per cent returns can be expected on equity mutual fund investments for 15 years. So, in the case of a time period of 25 years, about 15 per cent return on one’s money can be expected, Solanki said.
Mutual Fund Return Calculator
Assuming 15 per cent annual return after 25 years of continuous investment while maintaining a 15 per cent annual SIP step-up, the SIP calculator suggests that one needs to start with a monthly SIP. 12,000. This will help an investor to accumulate around 11 crore in the next 25 years.
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When asked about mutual fund SIP schemes which can give 15 per cent returns in 15 years; Vineet Khandare, CEO and Founder, MyFundBazaar India Pvt Ltd said, “Based on the risk appetite of the investor, he can choose between small-cap, mid-cap or large-cap funds.”
Vineet Khandare of MyFundBazaar has listed the following mutual fund SIP schemes that may hold well for investors who want 15 per cent return on mutual fund investments over a long period of time:
Small-cap funds: SBI Small Cap Fund – Regular Growth.
Mid Cap Fund: Aditya Birla Sun Life Mid Fund – Plan – Growth Regular Plan.
Large-Cap Funds: HDFC Top 100 Fund – Regular Plan – Growth.
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