Mutual Fund SIP Calculator: Ritesh is a 30 year old earner who wants to retire at the age of 55. However, before retirement, he wants to accumulate enough retirement funds to help him survive. 5 lakh monthly income for the next 30 years. He is ready to take market risk but he is not in a mood to make any direct investment in the stock market. According to tax and investment experts, this investment goal can be achieved with mutual fund investments but Ritesh will have to make some adjustments in his investments from time to time.
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Speaking on How Much Retirement Fund One Will Need to Get 5 lakh monthly pension for the next 30 years; Pankaj Mathpal, Founder and MD, Optima Money Managers, said, “For regular monthly income post retirement, SWP (Systematic Withdrawal Plan) is a better option. The corpus is assuming a CAGR (cumulative average growth rate) of 8 per cent per annum on retirement. , Nearby 7 crore would be required to get 5 lakh per month for 30 years.”
Pankaj Mathpal of Optima Money said that many people like Ritesh are investing in equity mutual funds instead of direct stock markets and getting good returns for their money. He said that investors, who are in the early stage of their career or are around 30 years of age, can opt for Systematic Investment Plan (SIP). He said that any mutual fund can start SIP anytime as the investor will get average return on his investment.
On how much returns can be expected from mutual fund SIPs for 25 years, Pankaj Mathpal asks investors to remember the 15 X 15 X 15 rule of mutual funds. He said that the rule says that an individual can expect 15 per cent return on his SIP for 15 years or more. Since the investment horizon is 25 years, one can expect to get around 15 percent return on one’s investment.
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On how to keep monthly SIP at the lowest level and get it 7 crore investment target; Karthik Jhaveri, Director of Wealth at Transcend Capital said, “At the age of 30, the monthly SIP that an earner can afford would be from 8,000 10,000. But, this will not be enough to achieve 7 crore target in simple simple SIP investment. The investor has to increase his monthly SIP along with the increase in his income. Hence, one should use annual step-up in one’s SIP.”
How much annual step would be enough to accomplish this 7 crore investment target; “Generally, 10 per cent annual growth in SIP is advised, but for retiring 5 years before the normal 60 years of age, it needs to be increased by around 15 per cent per annum,” said Karthik Jhaveri of Transcend Capital.
Mutual Fund Return Calculator
Assuming 15% return on mutual fund SIP for 25 years, mutual fund SIP calculator suggests that one needs approx. 8,000 with 15 percent annual step up to get monthly SIP 7 crore investment target
As per mutual fund SIP calculator, if an investor starts 8,000 monthly SIP, for the next 25 years using a 15 percent annual step-up, the investor can deposit 7.45 crore on 15 per cent annual mutual fund return.
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When asked about SWP schemes, which can yield 8 per cent per annum, Pankaj Mathpal of Optima Money Managers listed the following:
1]ICICI Prudential Balanced Advantage Fund;
2]Aditya Birla Sun Life Balanced Advantage Fund;
3]Nippon India Balanced Advantage Fund; And
4]Axis Balanced Advantage Fund.
Disclaimer: The views and recommendations above are those of individual analysts or personal finance companies, not Mint.
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