To achieve your financial goals by investing in mutual funds, it is pertinent to invest on a regular basis via a systematic investment plan (SIP). The investment made early in your career tends to grow disproportionately over time because the return that accrues in the first few years becomes the principal in later years, thus enabling the investment to grow at a faster pace in the later years.
Another important element to keep in mind while trying to achieve your financial goals is to be specific about your goals.
₹1 crore in 15 years
For example, if you believe that you will need ₹1 crore to meet your financial goal, which is due in 2040, i.e., 15 years from now, then it is essential to create your plan accordingly.
Here, we outline a monthly investment plan (by investing in mutual funds) to be able to accumulate ₹1 crore over a period of 15 years.
However, it is important to note that the monthly contribution required is a function of the rate of return that the investment is set to deliver.
For instance, if your portfolio gives an annual return of 9% (as the table below shows), the monthly contribution that would be required is ₹26,426, thus making the total contribution of ₹47.57 lakh.
Double-digit returns
Likewise, when your investment grows at 10%, you will need to contribute ₹24,127 every month via SIPs, thus contributing ₹43.43 lakh in total over a decade and a half.
Similarly, when the investment is growing at 11% per year, the SIP amount that you need to invest would be lower, i.e., ₹21,993, thus making a total contribution of ₹39.59 lakh.
And finally, when the investment grows at 12%, you will need to contribute ₹20,016 every month, thus investing a total of ₹36.03 lakh.
Note: This story is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment-related decision.
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