I am a 30-year old professional with a gross salary of ₹2 lakh. How much should I invest every month in a systematic investment plan (SIP)?
—Rajesh
You must strive to save at least 30% of your gross income or ₹60,000 every month. To calculate how much amount you should invest in SIPs, we will have to use the standard formula, which is 100 minus your age to be invested in equity through mutual funds. Going by this calculation, you should invest ₹42,000 or 70% of your monthly savings of ₹60000 in SIPs.
To round it off, you may begin with an SIP of ₹40,000. You should divide the amount in five SIPs of ₹8,000 each. The first two SIPs should be in two different large cap funds, the third can be in some good mid cap fund, the fourth SIP of ₹8,000 can be invested in a flexi cap fund and the fifth one can be in any theme of your choice like a small cap fund or special situation fund or an international equity fund or FMCG fund, etc.
I want to start investing in mutual fund SIPs. Can you please recommend the names of schemes that have a track record of at least 15 years and where the annual performance has been higher than 15% per annum?
—Reena
The tenure of the scheme is always very helpful in taking a decision as schemes with a long track record are considered better as compared to recently started schemes. However, the past performance may or may not be repeated in future and you should not base your decisions purely on the length of the scheme and the past track record of the scheme.
Nonetheless, to answer your question, here are five such schemes which were launched more than 15 years ago and where the performance has also been higher than 15% per annum on a CAGR (compounded annual growth rate) basis:
1. HDFC Flexi Cap Fund —launched on 1 January 1995.
2. Canara Robeco Emerging Equities Fund—launched on 11 Mach 2005.
3. Kotak Emerging Equity Fund—launched on 30 March 2007.
4. Kotak Small Cap Fund— launched on 24 February 2005.
5. ICICI Prudential Equity and Debt Fund—launched on 3 November 1999.
The past performance of all of the above schemes has been higher than 15% per annum on a CAGR basis. However, we again caution you not to take your decisions primarily based upon the past performance alone as it may or may not be repeated in future.
Rajiv Bajaj is chairman and managing director, Bajaj Capital Ltd.
First Published:
29 Mar 2023, 10:52 PM IST
FAQs
You must strive to save at least 30% of your gross income or ₹60,000 every month. To calculate how much amount you should invest in SIPs, we will have to use the standard formula, which is 100 minus your age to be invested in equity through mutual funds.
What should be the ideal SIP amount? ›
₹56,000-57,000 per month for 20 years for retirement (at 60:40 equity:debt). So, in total for all the three goals, you need to invest a little over ₹1 lakh per month. And this is the 'correct' SIP amount that we started this whole discussion with. And that is what will help you reach your goals.
What percentage do you get in SIP? ›
What is an SIP Calculator?
| Returns |
|---|
| Fund Name | 3 Years | 5 Years |
|---|
| Active Fund QUANT | 24.92% | 31.48% |
| Flexi Cap Fund PARAG PARIKH | 20.69% | 26.41% |
| Large and Mid-Cap Fund EDELWEISS | 22.34% | 24.29% |
6 more rowsStarting new sip will impact on overall returns on your portfolio, you only need to invest in 4–5 Mutual fund to get desired returns. Increasing sip will help you increase your returns, but there is a trick to do that.
How are SIPs calculated? ›
The SIP calculator will generate a result using the above information and the following formula: Amount invested × ({[1 + Periodic rate of interest] Total number payments – 1} / Periodic rate of interest) × (1 + Periodic rate of interest).
What is 7 5 3 1 rule in SIP? ›
The 7-5-3-1 rule is a comprehensive strategy for maximising the benefits of Systematic Investment Plans (SIPs) in equity mutual funds. This rule emphasises the importance of investment tenure, diversification, mental fortitude, and incremental growth in SIP amounts.
What is the 15 rule in SIP? ›
How to calculate 15-15-15 rule? To calculate the 15-15-15 rule, multiply 15% of your monthly income by 12 to get the annual investment amount. Invest this amount monthly for 15 years in a mutual fund targeting 15% annual returns. Use an SIP calculator to project potential earnings based on these inputs.
How much will I get if I invest $50,000 in mutual funds? ›
Considering 9% returns, an investment of Rs 50,000 can fetch you Rs 2,80,220 in fd in 20 years. Many people even ensure to use the FD Calculator to correctly estimate how much they can earn after a certain time period based on the ROI.
How much of your salary should you invest? ›
Generally, experts recommend investing around 10-20% of your income. But the more realistic answer might be whatever amount you can afford. If you're wondering, “how much should I be investing this year?”, the answer is to invest whatever amount you can afford!
What should be the ideal mutual fund portfolio? ›
The ideal number of mutual funds for building the best mutual fund portfolio depends on various factors, including your investment goals, risk tolerance, and time horizon. However, a general rule of thumb suggests having between 6 to 10 funds across different asset classes to achieve adequate diversification.
FV = P [ (1+i)^n-1 ] * (1+i)/i
- FV = Future value or the amount you get at maturity.
- P = Amount you invest through SIP.
- i = Compounded rate of return.
- n = Investment duration in months.
SIP interest rates for various market linked funds may vary. On average, for large cap equities, a return of 12-18% can be expected whereas from mid-cap equities, a return of 14-17% is expected. However, in the case of a long-term debt-based fund, one can expect a return of 6 – 9 % p.a. Why we need your mobile number?
How many SIPs do I need? ›
It is generally recommended to have a minimum of 3-5 different schemes in your SIP portfolio to achieve good diversification. You can have 3-4 equity funds from different categories like large cap, mid-cap, and small cap along with 1-2 debt funds based on your risk profile and investment goal.
What if I invest $5,000 in SIP for 5 years? ›
How much is Rs. 5,000 for 5 years in SIP? If you invest Rs. 5,000 per month through SIP for 5 years, assuming 12% return. The estimate total returns will be Rs. 1,12,432 and the estimate future value of your investment will be Rs. 4,12,431.
What is the average SIP amount? ›
The average SIP size rose by 9.6% year-on-year, reaching an estimated Rs 2,340 per SIP. This indicates investors are potentially increasing their monthly contributions. April witnessed an all-time high of 63.7 lakh new SIP registrations, a 32.1% increase compared to the 3-month average.
What if I invest $30,000 in SIP for 5 years? ›
Starting a SIP of Rs. 30,000 per month for 5 years is a prudent decision towards achieving your financial goals. By investing in diversified equity funds or balanced funds through a Certified Financial Planner, you can navigate market uncertainties and work towards building a robust investment portfolio.
What if I invest $1,000 a month in SIP for 30 years? ›
The Magic of Rs 1,000 SIP: How your corpus can grow to over Rs 35 lakh. If you invest Rs 1,000 every month through an SIP in a mutual fund and get 12 per cent returns every year, this is what you are estimated to get after 20, 25, and 30 years.
