Life is a box full of challenges from the daily huff and puff of meeting the basic needs to achieving the financial security at around 15-20 years from the present. A college goer may not value money as much as he would do post job and marriage because of the mounting responsibilities that come at that stage.
One can settle for a struggling present but won’t like to deal with the treacherous future as both mind and body fade with the age. When you reach the 50s or 60s of your lifetime, you would want a surplus money to enjoy, won’t you?
Let me be honest with you by saying money doesn’t grow overnight, it takes years. That’s why you should begin your investment journey as early as you can. Although there’s no ideal age to begin, it would be better to start investing at the age of 30 years, giving you as much as 30 years to build on the money, assuming you won’t work after attaining the age of 60 years. So, which is that one instrument to achieve the financial hegemony?
Without a doubt, it’s a mutual fund that can help achieve the same even though there are many financial instruments available in the market. It’s because of the fact that mutual fund counters market risks by choosing different avenues to grow your money, much unlike other instruments that do not offer diversification. It won’t be a surprise if you choose the mode of Systematic Investment Plan (SIP) to invest in mutual funds given the affordable and popular option it is for the investors.
It is a disciplined mode of investing money in mutual funds at regular intervals – daily, weekly, fortnightly, monthly, quarterly, half-yearly or annually. The reason why it’s an affordable investment option is due to the fact that you can invest with an amount as low as ₹500 on a monthly basis. And if you want to get an idea of the earnings you could make on your SIP investments, there’s a Mutual Fund SIP Return Calculator at your disposal.
How to Use Mutual Fund SIP Calculator?
The calculator is available online and so you can find the results easily. It runs on an algorithm that helps it present the accurate results. All that you need then is to enter the amount of investment, the rate of return (assumed) and the period of investment in the calculator, which will then show the earnings you are likely to make over the years you may choose to invest for.
It’s not only about the earnings you should gross over time but also the desired corpus that can help accomplish your financial goals. The calculator is adept at letting you know the periodical investment needed to make to fulfill your goals. All you need is to express the amount of corpus you need to achieve over a particular period. The calculator will then give a result showing the exact amount of investment needed to reach the desired figure. So, if the investment amount comes higher than what you can afford, you better increase the period of investment by a few years and check the results.
What Should be Your Return Expectations?
Return expectations should vary depending on the type of mutual funds you are investing your money. Long-term goals like wedding and higher studies need the power of equity funds, which invest predominantly in equity and equity-related securities to upscale the growth of money.
The returns do vary because of the volatility that equities are known for. But long-term equity investment, particularly through SIP, is considered fruitful in the wake of risks getting lowered and returns getting compounded. The risks average out and returns mount over the long term. On an average, you can expect a return of 13%-15% over the long term, even though the actual figures can go much beyond the range.
When it comes to debt investments, the return expectations should be around 8%-12%. The debt funds invest in relatively safer instruments like certificate of deposits, bonds, commercial papers, etc.
According to the return expectations shown above, you should enter the assumed rate of return in the Mutual Fund SIP Return Calculator to get a realistic result.