Mutual funds: Consistency is the key to long-term investment success. If you want to accumulate a substantial amount, it is essential to set aside a small amount every month (in the form of systematic investment plans or SIPs) and grow it over a period of time. Suppose you have a financial goal of accumulating ₹50 lakh in the next 10 years for something very specific, say buying a car or sending your child for higher studies. You are recommended to invest in mutual funds, preferably via SIPs. We have done some calculations to help you figure out how much consistent investment is required to create the desired corpus of ₹50 lakh in a period of 10 years. Multiple scenarios We have also considered several scenarios in which you can save this amount of money. Scenario I (Rate of return is 9% per annum): To be able to save ₹50 lakh, you need to invest a SIP of ₹25,837.89. This way you will invest a total of ₹31 lakh. Scenario II (Rate of return is 10% per annum): To be able to save ₹50 lakh, you will need a SIP of ₹24,408.70. Overall, you need an investment of ₹29.29 lakh to accumulate ₹50 lakh. Interest SIP (Rs) 9% 25,837.89 10% 24,408.7 11% 23,041.67 12% 21,735.47 (Source: Objective SIP Calculator; calculations show how much SIP is required to build up ₹50 lakh if a return from a Scenario III (R1%) is now: the rate of return is 11% per annum year, you will need a SIP of ₹23 041.67. This will result in a total investment of ₹27.65 lakh. Scenario IV (Rate of return is 12% per annum): If the rate of return is 12% per annum, one would need an investment of ₹21,735.47. This means investing a total of ₹26.08 lakh to collect ₹50 lakh. After the return on SIPs over a period of 3 to 15 years were compared, a recent report by WhiteOak Capital Mutual Fund noted that while stocks have proven to be a volatile asset class, volatility decreases as investors increase their investment horizon. It concluded that a successful SIP is more about starting early, maintaining the discipline to invest regularly and investing for the long term to achieve financial goals. Note well: This story is for informational purposes only. Please speak to a SEBI registered investment advisor before taking any investment related decision. For all personal finance updates, visit here
Mutual funds: Want to save ₹ 50 lakh in the next 10 years? Here is how much you should invest in SIP
