Mutual fund calculator: How much monthly SIP you need to retire at 50


Mutual fund calculator: Adarsh Vinay is a 24-year old professional earning 40,000 per month. Adarsh belongs to a middle middle class family and he wants to retire at the age of 50 years, as he has begun his career quite early. Adarsh Vinay has slightly higher risk appetite but he is not ready to invest in direct stock markets.

On how Adarsh Vinay can achieve his retirement goal; Pankaj Mathpal, Founder & MD at Optima Money Managers said, “For a middle middle class family person, 60,000 is enough to meet one’s monthly financial requirement post-retirement. However, if an investor plans to retire after 25 year from now, then the current 60,000 per month won’t be enough for him or her because inflation will also grow in this period. Keeping 6.5 per cent average inflation for the next 25 years, this 60,000 monthly requirement post-retirement will go up to around 3 lakh. So, one needs to accumulate that much of retirement fund that can help him or her to get 3 lakh per month with 6.5 per cent inflation adjusted after retirement.”

Pankaj Mathpal said that inflation will continue to grow after the retirement of the investor and hence the investor needs to develop enough of funds that can help him fetch 3 lakh monthly income with 6.5 per cent annual inflation adjusted post-retirement. He said that the fund has to be re-invested in SWP (Systematic Withdrawal Plan) as it would yield around 8 per cent per annum, beating the average annual inflation of 6.5 per cent.

Asked about the fund required after 25 years to meet this retirement goal, Pankaj Mathpal of Optima Money Managers said, “Assuming return on the investment 8 per cent per annum and 6.5 per cent annual rate of inflation, around 8.82 crore would be required to get a monthly pension of inflation adjusted 3 lakh per month.”

On investment tool that can help the investor meet this 8.82 crore investment goal in 25 years; Vinit Khandare, CEO & Founder at MyFundBazaar India Private Limited said, “Equity mutual funds can be a good option for the investor if it is shy of investing in direct stock markets. 15 x 15 x 15 rule of mutual funds suggests that one can expect to get 15 per cent return on one’s equity mutual fund investment, if the time horizon is 15 years or more.” However, he also advised investor to go for annual SIP step up of 15 per cent as he plans to retire at 50 years of age.

Mutual fund return calculator

Assuming 15 per cent return on one’s mutual fund equity investment in mutual fund SIP for 25 years maintaining 15 per cent annual SIP step-up, the mutual fund SIP calculator suggests that the investor needs to start with monthly SIP of 9,500. This will enable the investor to accumulate 8.85 crore.

Source: piggy SIP calculator

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Source: piggy SIP calculator

Asked about the mutual funds SIP that can yield 15 per cent, Pankaj Mathpal of Optima Money Managers listed out the following mutual fund plans:

1] Nippon India Flexi Cap Fund;

2] Aditya Birla Sun Life Equity Advantage fund;

3] ICICI Prudential MNC Fund;

4] Canara Robeco Flexi cap.

On SWP that can yield 8 per cent annual return Vinit Khandare of MyFundBazaar India listed out the following plans:

1] ABSL Low Duration Fund;

2] HDFC Ultra Short Term Fund; and

3] SBI Savings Fund.

Disclaimer: The views and recommendations made above are those of individual analysts or wealth management companies, and not of Mint.

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