Kolkata: When a person steps into adulthood — when he/she turns 18 — the excitement of childhood ends and the days of challenge begin. This is the time when one shapes ones future, which is usually through higher studies, going for professional training or by taking steps to set up a business of one’s own. To proceed in each of these directions, one needs money.
Therefore, the best way one can help one’s kids is by arranging funds for him/her when he/she steps into adulthood. In today’s world one of the prudent ways to achieve a sizeable fund is to take the help of mutual funds since it offers one the high returns of equity while not taking exposing oneself to its significant risk or volatility. One effective way of going for such a financial plan is by investing in Systematic Investment Plan in mutual fund, or SIP.
Use a SIP calculator for clarity
Crorepati kid! At first glance amassing Rs 1 crore for a kid when he/she turns 18 appears daunting. But using a mutual fund SIP calculator might make the situation look more achievable. Let’s go into the numbers. But one thing to keep in mind is that the real trick is to start SIPs as quickly after the birth of the kid as possible. There is no need to invest in the name of the kid. The SIPs can be done in the name of any of the parents but the investments have to be earmarked for the use of the kid when he/she turns 18.
How much SIP is needed for Rs 1 crore at 18
Considering one starts SIPs in the very first year — the closer to the birth as possible — one needs only Rs 9,500 a month to build a kitty of Rs 1 crore in 18 years. The rate of return assumed here is 15%, which is highly possible since several funds have generated that sort of return over a long period. One will reach a total amount of Rs 1,04,90,000 — the investment being of Rs 20,52,000 out of pocket while the returns will be a whopping Rs 84,38,425.
Now, if you go with the 12% rate of return which is the template return for SIP calculators and is rather a moderate return. One will need to invest Rs 13,500 a month to generate a corpus of 1,03,33,430 in 18 years. The out of pocket investments will be Rs 29,16,000 and the returns will be Rs 74,17,430.
(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, commodity, any form of alternative investment instruments and crypto assets.)
The target looks rather daunting at first glance but a SIP calculator or a goal SIP calculator will make the goal appear rather achievable when one keeps tweaking the returns and the SIP amounts keeping the target and time in mind. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
