Mutual Fund Calculator: Systematic investment plan (SIP) has made life easier for the long=term investors as it allows a mutual fund investor to create an ocean from the tip of an iceberg. According to the tax and investment experts, if someone is ready to take some extra risk by investing in the equity mutual funds, then one can become a crorepati in the long-term provided they follow some investment tricks like annual step-up in the monthly mutual funds SIP. They are of the opinion that investment for the period of 20 years or above can easily fetch around 15-17 per cent returns as in such a long-term perspective mutual fund managers can easily outperform the market by around 3-5 per cent. Since the equity market would give at least 12 per cent returns in the long-term like 20 years or above, a mutual fund investment can fetch return to the tune of 15-17 per cent.
Speaking on the mutual funds SIP returns in long-term perspective Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, “In the long-term perspective, one can expect to get at least 12 per cent returns from the equity market. As mutual fund managers’job is to outperform the stock market performance, mutual funds SIP for 20 years or above time-horizon is expected to give 15 to 17 per cent returns as fund managers’ generally outperform the market by 3-5 per cent.”
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Assuming the above mentioned 15 per cent returns on mutual fund SIP for the period of 30 years, if a mutual fund investor starts SIP with Rs 6,000 per month, the mutual fund calculator suggests that at the rate of 15 per cent annual returns in 30 years, the investor would get a maturity amount of Rs 4,15,39,678. This maturity amount is possible when a mutual fund investor sticks to the basic style of SIP investment.
Highlighting upon the annual step-up trick that can help an investor to enhance the investment amount and the maturity amount Jitendra Solanki, a SEBI registered tax and investment expert said, “One gets annual increment and hence he or she should increase one’s monthly SIP amount annually. It helps the SIP investor to increase one’s investment amount exponentially over a time period that leads to rise in the maturity amount in tandem.” He suggested SIP investors to increase one’s monthly SIP to be increased by 15 per cent annually as it would help the investor to get the compounding benefit on the interest earned in one’s money.
Assuming 15 per cent annual step-up in monthly SIP for the same Rs 6,000 for the period of 30 years, the mutual fund calculator suggests the maturity amount of Rs 13,49,45, 480 — an amount that would definitely help you achieve at least one of the long-term investment goals.