Need a big fund of 10 lakhs in 5 years? Know how much monthly SIP will have to be done and what is the calculation

SIP Investment Growth Strategy: Systematic Investment Plan i.e. SIP is considered to be the most systematic and disciplined way of investing in mutual funds. By adopting SIP investment growth strategy, investors can build a large corpus over the long term despite market fluctuations. If your goal is to raise a huge amount of Rs 10 lakh in the next 5 years, then proper planning and regularity is very important. Through SIP, you can easily meet your future financial needs by converting your small savings into investments.

Features of SIP investment

SIP is a method of investment in which you deposit a fixed amount in a mutual fund every month or quarter. This investment method is known to give tremendous benefits of compounding i.e. compound interest and rupee cost averaging. Its main objective is to make investment easy and accessible to everyone so that wealth can be accumulated with discipline.

Mathematics of fund of Rs 10 lakh

According to the SIP calculator, if you assume an average annual return of 12 percent then the calculation is very simple. To create a corpus of Rs 10 lakh in 5 years, you will have to start a monthly SIP of Rs 12,200 from today itself. On completion of the five year period, you will have accumulated a total maturity amount of Rs 10,06,334 which will be useful to you.

Analysis of investment and returns

During this five-year investment period, you will invest a total amount of Rs 7,32,000 in installments from your own pocket. Based on 12 percent return, you will get an additional profit or wealth gain of Rs 2,74,334 on the amount invested. This figure shows how your principal amount grows exponentially over time through regular investments.

15 percent return option

If your mutual fund performs well and you get an annual return of 15 percent, the investment will be less. To achieve the target of Rs 10 lakh on the basis of 15 percent return, you will have to do SIP of Rs 11,200 every month. The top performing funds present in the market have also given tremendous returns of 15 to 18 percent on an average in the long run.

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Market Risk and Caution

Mutual fund investments are completely subject to market fluctuations and risks so it is important to exercise caution. Equity-oriented SIPs have generally given an average return of 12 percent, which is considered a safe parameter. Investors are advised to remain disciplined and continue investing for the long term in view of market volatility.