Investors have been exploring new asset classes and investment instruments in recent years amid a booming stock market and rising financial awareness in India. The mutual funds offer an opportunity for investors to park their money in more rewarding assets like equities compared to traditional savings instruments without direct exposure to market risks. Mutual fund Systematic Investment Plans (SIPs) are gaining traction as they offer enormous flexibility and liquidity.
Compared to traditional tools like fixed deposits and small savings schemes, mutual funds have been offering higher returns over the years. Additionally, SIPs are more flexible, allowing investors to start, pause, or increase their investment as needed. The key to wealth accumulation via SIPs is to start early and stay invested for a longer tenure.
Even a modest SIP of Rs 5,000 monthly can grow substantially over 20-25 years. This makes SIPs one of the suitable investment options to build a sizable retirement fund.
If you are looking forward to building a Rs 2 crore corpus with a monthly SIP of Rs 5,000, here’s how your money would grow:
Target: Rs 2 crore
Monthly SIP: Rs 5,000
Time needed: 31 years
Invested amount: Rs 18,60,000
Estimated returns: Rs 1,80,92,022
Total value: Rs 1,99,52,022
Hence, an SIP of Rs 5,000 can help one create a significant retirement corpus, provided they have an investment timeline of at least 30 years.
Investors have been exploring new asset classes and investment instruments in recent years amid a booming stock market and rising financial awareness in India. The mutual funds offer an opportunity for investors to park their money in more rewarding assets like equities compared to traditional savings instruments without direct exposure to market risks. Mutual fund Systematic Investment Plans (SIPs) are gaining traction as they offer enormous flexibility and liquidity.
Compared to traditional tools like fixed deposits and small savings schemes, mutual funds have been offering higher returns over the years. Additionally, SIPs are more flexible, allowing investors to start, pause, or increase their investment as needed. The key to wealth accumulation via SIPs is to start early and stay invested for a longer tenure.
Even a modest SIP of Rs 5,000 monthly can grow substantially over 20-25 years. This makes SIPs one of the suitable investment options to build a sizable retirement fund.
If you are looking forward to building a Rs 2 crore corpus with a monthly SIP of Rs 5,000, here’s how your money would grow:
Target: Rs 2 crore
Monthly SIP: Rs 5,000
Time needed: 31 years
Invested amount: Rs 18,60,000
Estimated returns: Rs 1,80,92,022
Total value: Rs 1,99,52,022
Hence, an SIP of Rs 5,000 can help one create a significant retirement corpus, provided they have an investment timeline of at least 30 years.
With techniques like ‘step-up’ SIP, this dream can be achieved even faster. The ‘Step-up’ facility is a simple method to increase the SIP amount at regular intervals (such as per annum).
Target: Rs 2 crore
Monthly SIP: Rs 5,000
Step-up goal: 10% annual
Time needed: 25 years
Invested amount: Rs 59,00,823
Estimated returns: Rs 1,54,76,906
Total value: Rs 2,13,77,730
In the case of using the ‘step-up’ technique, the overall investment amount increases in the long term. However, it helps the investor reach their goal faster. Investors should also note that mutual fund returns are not guaranteed.