Wealth creation over the long term is not a simple task. You have to ensure that you continue to invest till your investment objective is accomplished. Continuing an investment journey for 10 years or longer can become difficult especially because during this time life may throw unforeseen exigencies upon us and we might have to either quit midway or temporarily put our investments on hold. However, to ensure that you continue your investment journey by investing small sums at fixed intervals you can consider starting a Systematic Investment Plan in mutual funds.
What is a Systematic Investment Plan?
A Systematic Investment Plan or SIP is an easy and disciplined way to invest, especially if you have a long term investment horizon. This way of investing is known to bring in the discipline for someone who is new and isn’t sure about how to remain invested for longer durations. All an investor has to do is decide which mutual fund to invest in and then decide the monthly SIP sum. After this, the investor has to decide whether he wants to invest in mutual funds via SIP weekly, monthly, quarterly, biannually, or yearly. After this, they can either make the SIP investments manually or automate their transactions post which every month on a fixed date, the predetermined sum will be debited from the investor’s savings account and they can buy units depending on the current mutual fund NAV (net asset value).
When you are investing for a long duration it is obvious that you would want to know how much your investments can potentially fetch in the long run. To find that out, you can use the SIP calculator.
What is a SIP calculator?
The online SIP calculator is a free tool that any layman can use. There are two unique ways in which the SIP calculator works and hence can help investors simply financial planning and help them is creating a foolproof investment strategy. All an investor has to do is put in a few details and within no time the SIP calculator computes all the intricate calculations and comes up with close to real numbers. Yes, these are just accurate numbers since the SIP calculator does not take certain factors such as mutual fund expense ratio or exit load into consideration while computing results
I want to build a corpus of Rs 5 crores in 15 years. How can the SIP calculator help me?
The online SIP calculator is a time saving tool as it computes complex calculations in just a few seconds which an average human might take a very long time to calculate manually using a pen and paper. So if your goal is to build a corpus worth Rs 5 crores in the next 15 years, you can use the SIP calculator to determine how much you monthly SIP investments should be so that at the end of your time horizon you have accumulated the desired corpus.
In the SIP calculator, enter –
- Total wealth you want to earn – Rs 5 crores
- Time horizon – 15 years
- Expected mutual fund rate of return (Let us assume 10%)
The SIP calculator will display the following results –
- Monthly SIP investment amount needed – Rs 1.2 lakhs
- Total invested sum – Rs 2.16 crores
- Total wealth created – Rs. 5. 01 crores
Thus, if you wish to build a corpus of Rs 5 crores in 15 years then you will have to start a monthly SIP of Rs. 1.2 lakhs to achieve the financial goal.