Mutual fund calculator: Ravi Ujjwal is a 30 year old professional with monthly take home salary of ₹75,000. He want to retire at the age of 55 and for that his personal calculation suggests that he would require ₹20 crore retirement fund in hand after 25 years. However, he don’t want to take highly risky asset allocation like direct stock market investment. On whether his investment goal is economic viable or not, tax and investment experts believe that the goal is quite achievable as the investor had 25 years in hand and mutual funds SIP can be an investment option that can solve Ravi’s investment tool search. However, experts said that simple investment formula won’t work. So, there would be some pun needed in Ravi’s case.
Also Read– Mutual Fund SIP: How much time and money it will take to get Rs 5 crore
Speaking on the pun needed to achieve ₹20 crore retirement fund in 25 years, Pankaj Mathpal, MD & CEO at Optima Money Managers said, “To accumulate ₹20 crore retirement fund in 25 years, one will have to use annual SIP step up. This will help the investor to keep one’s initial monthly SIP at least possible amount. So, rather continuing with same monthly SIP amount for 25 years, my suggestion is to increase the SIP amount with increase in one’s income. So, annual SIP step up is an important adaptation that one should maintain religiously during the investment period.”
On annual SIP step up that an investor can maintain to accumulate ₹20 crore in 25 years, Kartik Jhaveri, Director — Wealth Management at Transcend Capital said, “Generally, we advise 10 per cent annual step up in one’s monthly SIP amount. However, ₹20 crore retirement fund in 25 years is highly ambitious and hence, I would suggest 15 per cent annual step up. By using this one would be able to start with smallest possible monthly SIP amount to start the mutual fund journey of ₹20 crore retirement fund accumulation.”
Also Read : Can’t Register for SBI WhatsApp Banking Service? Here is What you Need to do
15 x 15 x 15 rule of mutual funds
On how much return one can expect from one’s mutual funds SIP for 25 years, Kartik Jhaveri of Transcend Capital said, “On an average, mutual funds 15 year track record suggests 15 per cent return on amount invested for 15 years. This means, if an investor invests ₹15,000 per month for 15 years in mutual fund SIP plan, the return one can expect would be at least 15 per cent.” He said that one can expect same 15 per cent return on one’s SIP for 25 years.
Mutual fund SIP calculator
Assuming 15 per cent annual return on one’s money invested for 25 years using 15 per cent annual step up, mutual fund return calculator suggests that one would need to start mutual fund SIP with ₹21,500 per month. However, to remain safe, it is advisable to start with ₹22,000 monthly SIP as mutual fund investments are subject to market risk as well.
See SIP calculator below:
Also Read : Bank FD rates: SBI, ICICI, Kotak Mahindra, HDFC Bank, Union Bank fixed deposit rates compared
By using 15 per cent annual step up, an investor may expect to get ₹20,50,02,443 maturity amount by investing ₹5,61,77,357 in 25 years.
On equity mutual funds that may give such robust 15 per cent return in long term, Pankaj Mathpal of Optima Money Managers listed out the following three mutual fund schemes:
Also Read :Bank strike: SBI cautions customers ahead of upcoming strike, says work may be impacted
1] ICICI Prudential Flexi Cap Fund;
2] Canara Robeco Emerging Equities Fund; and
