Future We start adding money years in advance to meet our needs and goals. Some deposit money for children's education, some deposit money for children's marriage. Some people deposit money for their children's business, some people also deposit money to buy a house and car and some people invest for their retirement. We have many long term investment options available to achieve long term goals. But, mutual fund SIP is considered a better investment tool to achieve long term goals. Here we will know how much SIP you will have to do every month to create a fund of Rs 5 crore in 25 years?
Returns depend on these 4 things
The returns from SIP depend on 4 main things. The first is for how many years you have to invest, the second is how much money you have set a target to deposit, the third is how much money you will invest and the fourth is what percentage of return you are getting. It may be in the hands of investors to implement the first three things but the fourth thing i.e. returns is not in anyone's hands. The returns received in SIP completely depend on the movement of the stock market. But, the longer you do SIP, the more benefit you will get from compounding.
How much SIP will have to be done if you get 15 percent return?
If you have to deposit Rs 5 crore in 25 years and you get an estimated return of 12 percent every year, then you will have to invest Rs 26,500 every month. If you do SIP of Rs 26,500 every month, then you can deposit Rs 5 crore in 25 years. If you get an expected return of 15 percent every year, then you can accumulate Rs 5 crore in 25 years with just a SIP of Rs 15,500. Additionally, if you get an expected return of 18 percent every year, you can accumulate Rs 5 crore in 25 years with just a SIP of Rs 8600.
If you are going to do SIP then keep these things in mind also
Now the thing to be noted here is that mutual fund SIP never gives uniform returns and there are always constant fluctuations in it. Therefore, to achieve your goal, invest as much money as possible in SIP for as long as possible as per your capacity. The special thing about SIP is that you can change its amount every month. Along with this, you also have to keep in mind that you will also have to pay long term capital gains tax on the income earned from mutual fund SIP.
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