With a net salary of Rs 50,000 and monthly expenses of Rs 30,000, Mithilesh is ready to embark on his investment trip with a high risk appetite and without dependents.
To achieve its ambitious goal, it plans to start with a monthly report SIP 10,000 rupees, with the aspiration of increasing this amount annually.
eastern time Mutual funds spoke to Girirajan Murugan, CEO, FundsIndia, to explore effective strategies for wealth accumulation through mutual funds.
Girirajan emphasized the importance of disciplined investing and discussed how market fluctuations can affect investment results.
Consultation by Mithilesh Pamnani
I am a 39-year-old single professional, earning a net salary of Rs 50,000 per month and living in a second-tier city. My monthly expenses, including accommodation, food and utilities, amount to Rs 30,000.
With a high risk appetite and no dependents, I want to start investing in mutual funds with an aim to build a corpus of Rs 5 crore by the time I turn 60.
I am already considering investing in a Nifty Index Fund and would like suggestions on three additional equity mutual funds to help me achieve my goal.
Responses from Girirajan Murugan, CEO, FundsIndia
Q) I plan to start with a monthly SIP of INR 10,000 and increase my investment annually. Let me know what monthly investment I should aim for to reach my goal.
TO) For a monthly SIP of Rs 10,000, assuming a 12% return, it will take around 33 years to achieve the corpus of 5 cr. If you increase your SIP by 10% every year and assume a return of 12%, it will take around 26 years to reach Rs 5 crore.
But, in rare circumstances, if there is a market crash (e.g. a Covid crash where markets fell more than 30%) in the last 1 or 2 years, then at those times you should have the flexibility to extend your framework of time in 1 -2 years. You may need to re-evaluate your goal corpus or consider increasing your SIP.
Q) How can one build a Rs 5 corpus in the next 20 years?
TO) For a monthly SIP of Rs 25,000, with an annual increase of 10% and assuming returns of 12%, it will take close to 20 years to reach the corpus of Rs 5 crore.
Every year, you increase your SIP contribution by 10%.
For example:
For the first year, you invest Rs 25,000 per month. In the second year, increase the monthly investment by 10%, which is equivalent to Rs 27,500 per month.
In the third year, the monthly contribution becomes 30,250 rupees (again 10% more), and so on. This growing SIP strategy allows you to gradually increase your contributions over time as your income and savings capacity grow.
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