Mutual fund calculator: Monthly SIP you need to create ₹20-cr retirement fund

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Mutual fund calculator: Mutual fund investments are subject to market risk, but if we go by the tax and investment experts’ views, mutual funds investment for long-term is not that much risky and it delivers at least 12 per cent annual return as well. As mutual funds allows systematic investment plan (SIP), in which an investor can invest in monthly, quarterly or half-yearly mode too, it is suitable to those investors who don’t have a lump sum amount for investment. Mutual fund SIP can be useful in creating retirement fund for those who start investing in the early phase of one’s career. But, it is useful for those also who are late in investing. However, whether an investor is late or has started investing in early phase of one’s career, investment goals are expected to remain same, especially when it comes to retirement fund planning.

Speaking on the mutual fund SIP return Pankaj Mathpal, Founder & CEO at Optima Money Managers said, “For long-term investment, equity mutual fund is the best option because it gives at least 12 per cent return, which is enough to beat the inflation during the investment period.” Mathpal said that if an investor starts investing from the early phase of one’s career, then the required monthly SIP to meet one’s investment goal will be lower, while in the case of investors who are late in investing, their monthly SIP will go up if they want to achieve the same investment goal.”

Standing in sync with Pankaj Mathpal’s views; Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, “Going long in SIP is always advisable. But, one should increase one’s monthly SIP annually too with the passé of time. It helps the maximise one’s mutual fund return. So, if you want to become rich, you need to do SIP with annual step-up strategy.”

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On how much annual step-up in monthly SIP will be enough Kartik Jhaveri of Transcend Consultants said, “Normal practice is 10 per cent annual step-up but I would advise to go for 15 per cent annual step-up. This 5 per cent extra step-up in monthly SIP helps one’s maturity amount to get almost doubled. So, if someone is clear about one’s investment goal, then in that case, higher annual step-up helps keep monthly SIP lower.

Mutual fund SIP calculator

Let’s assume an investor is in early phase of one’s career (say 25 years old) and he or she want to create 20 crore retirement corpus. In that case the investor has 35 more years for investing. If the investor decides to start monthly SIP, then assuming 12 per cent return on one’s investment maintaining 15 per cent annual step-up strategy, it would require 6,000 monthly SIP to create 20 crore retirement corpus.

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As per the mutual fund SIP calculator, one’s 6000 monthly SIP for 35 years would grow 20,59,12,287 or 20.59 crore if the annual step-up is 15 per cent and return is 12 per cent per annum.

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Source: Piggy mutual fund calculator

However, in the case of an investor who was late in getting employed or due to some reasons couldn’t start investing in early phase of one’s career, for achieving 20 crore retirement corpus, it’s for sure that one will have to increase monthly SIP.

As per the SIP calculator, if an investor starts investing in monthly SIP at 30 years of age maintaining same 15 per cent annual step-up strategy, one will require 13,000 monthly SIP to achieve 20 crore ( 20.12 cr) investment goal.

Source: Piggy mutual fund calculator

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Source: Piggy mutual fund calculator

So, it’s always advisable to start SIP in the beginning of one’s career as it helps achieve whopping investment goal with small monthly SIP.

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