Here’s how much you need to invest to create a corpus of Rs 50 lakh
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Investing in debt-related schemes? Avoid dividend plans, take equity schemes to make more moneyDisclaimer: This story is for informational purposes only and should not be taken as investment advice.
In the good old days the only advice you’d ever hear past around regarding investments would be ‘at least 10% of monthly income needs to go in the bank’. Today, with so many more choices money can grow with attractive interest rates in a whole host of investment options.
To create a huge corpus in savings for an individual will include two basic things – time and initial investment. Investors agree that finding the right portfolio is essential.
One such query of creating a corpus of Rs 50 lakh was asked to ET mutual funds on Monday. “I am investing Rs 1,500 in three mutual fund schemes: SBI Multicap Fund, SBI Balanced Fund, and SBI Bluechip Fund. My plan is to accumulate around Rs 50 lakh in 20 years. I want to know whether I am investing in correct funds? If not, please suggest some other schemes.”
In an earlier report by Zeebiz, we calculated that an investment of merely Rs 5,000 in SIPs for a period of 20 years would give a future value of over Rs 57 lakh. This considering an expected rate of return at 13%.
(Screen grab from an SIP calculator for illustration purposes.)
The investor in question had a total investment totalling to nearly Rs 4,500 per month. However, advice solicited on ‘risk’ or the ‘right’ schemes would depend on the risk-taking capacity of the individual.
In simple terms, the higher amount a person is able to invest in equity or other investment portfolios the higher the returns that would be garnered.
“A multicap scheme is recommended to investors with a moderate risk appetite, whereas balanced funds are typically recommended to new equity mutual fund investors. Largecap schemes like Bluechip Funds are ideal for conservative equity investors. Also, you are exposing your entire investment to extra risk by investing in a single fund house. Your returns would depend on the fortunes of a single fund house,” the analyst replying to the query suggested.
“Assuming an annual return of 12 per cent, you would be able to create a corpus of Rs 45 lakh at the end of 20 years. Try to increase your investments in line with your income every year to make a bigger corpus. Investing a small sum regularly over a long period is the only way to create a large corpus in the long term,” the report concluded.
Do note that to achieve the individual’s financial goal he/she would have to wait 20 years.
In an investor call made to Zeebiz mutual fund desk, an investor wanted to create a corpus of Rs 1 crore in a span of seven years. This is double the amount of returns which was earlier in question and in a shorter span of time.
“For a goal of Rs 1 crore in seven years, he will have to invest close to Rs 80,000 per month, if we assume 12% as the rate of return, Shweta Jain, International Money Matters said.
The investor was further advised to buy a few more large-cap funds in addition to the SIP in six funds already present with the investor.
Watch the video to know which SIPs give you better returns:
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