Kolkata: Money is pouring into the Indian markets through mutual fund SIPs. Even in February, when the market was in the grip of a sharp correction, the inflows through the SIPs have `amounted just short of Rs 26,000 crore, which indicates far more than Rs 1,000 on average every trading day. The reasons are not far to seek. Experts have repeatedly told the common people that they should not act in panic and take out their investment during downturns in the market, most of which turn out to be temporary.
All the prominent names in the Indian mutual fund space such as Raamdeo Agrawal of Motilal Oswal or Nilesh Shah of Kotak Mahindra AMC or A Balasubramanian Aditya Birla Sun Life AMC have all advised that the India growth story is looking very strong in the next several years and, if anyone has faith in that story, corrections in the equity markets will be temporary and investors should have stay invested despite temporary downturns and resist temptations to withdraw money. Let’s have a close look at how mutual fund SIPs can help one build wealth.
Goal-based SIP calculator
The goal-based SIP calculator is an excellent guide that tells an individual how much one needs to invest to reach a specific goal. Let’s rake the example of a person who begins to invest from the age of 25 years to build a corpus of Rs 5 crore when he/she turns 60. Let’s assume an average rate of return of 12% during the tenure of the investment.
If the individual continues SIP diligently for 35 years — starting at 25 to end at 06 — he/she needs to put in only Rs 7,775 every month to build the Rs 5 crore corpus at the time of retirement. In that case the total out of pocket investment will amount to only Rs 32.05 lakh.
If SIP journey starts at 30 years, 35 years
If an individual starts the SIP journey with the same goal, he/she has to invest a far higher amount every month — Rs 14,306 — to reach the destination. Please note that the SIP amount almost doubles for a delay of 5 years. The total nominal amount of investment to get Rs 5 crore at 60 would be Rs 51.50 lakh. If a 35-year-old starts investing in SIP with a view to amassing Rs 5 crores at 60, the amount per month will balloon to Rs 26,612 and the total investment will stand at Rs 79.84 lakh. It is clear from the above calculation why investment experts always recommend that one should begin the investment journey as early as possible.
(Disclaimer: This article is only meant to provide information. News9 does not recommend buying or selling shares or subscriptions of any IPO, Mutual Funds, precious metals and crypto assets.)
Mutual fund systematic investment plans have turned out to be the preferred investment instrument for the Indian middle class with inflows through this route amounting to about Rs 26,000 crore even in February 2025, which is significantly higher than Rs 1,000 crore a day. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
