1. I have a SIP of Rs 75,000 per month across ICICI/ India Opportunities Fund, ICICI/ Value Discovery Fund, ICICI / Transporation & Logistics Fund, Axis Flexi Cap Fund, Canara Robeco Emerging Equities, Aditya Birla SL Focused Equity Fund(G) and HDFC Mid-Cap Opportunities Fund(G).
I want to continue investing Rs 75k per month for the next 10 years. Assuming an average return of 8-12%, how much corpus will I be able to build by 2034?
Ans: It is difficult to predict the exact corpus amount you will accumulate by 2034 due to the following reasons:
• Market Fluctuations: Equity mutual funds invest in stocks, and the stock market fluctuates over time. This means that the actual returns you will get can be higher or lower than the estimated range of 8-12%.
• Fund Performance: The performance of each mutual fund you have chosen can vary. Some funds may outperform the average market return, while others may underperform.
However, I can provide you with an estimated range of corpus amounts based on your SIP amount, investment period, and expected return rate. Here's how you can calculate it:
SIP Calculator: You can use an SIP calculator available online or provided by your mutual fund provider. These calculators take into account your monthly investment amount, investment tenure, and expected return rate to estimate the maturity amount.
Manual Calculation (Simplified):
• Total Investment: Multiply your monthly SIP amount (Rs 75,000) by the number of months you will invest (10 years * 12 months/year) = Rs 9,000,000
• CAGR (Compound Annual Growth Rate): This is the average annual return you expect on your investment. Since you expect a range of 8-12%, consider different CAGRs within this range (e.g., 8%, 10%, 12%)
• Future Value Formula: Use the Future Value (FV) formula to calculate the estimated corpus amount for each CAGR. You can find the FV formula online or in finance textbooks.
Example:
Let's say you calculate the future value for a CAGR of 10% using the FV formula:
FV = P * [(1 + r)^n - 1 ] / r
Where:
• FV = Future Value
• P = Monthly Investment (Rs 75,000) * Investment Tenure (120 months) = Rs 9,000,000
• r = Expected Return Rate (as a decimal) = 10% / 100 = 0.1
• n = Number of compounding periods (monthly in this case) = 120 months
Estimated Corpus with 10% CAGR:
FV = Rs 9,000,000 * [(1 + 0.1)^120 - 1 ] / 0.1 ≈ Rs 69,531,106
Repeat the FV calculation for other CAGR values (8% and 12%) to get a range of possible corpus amounts.
Important Note: These are just estimates, and the actual corpus amount you will get may be different.
Here are some additional points to consider:
• Diversification: You have chosen a good mix of funds across different categories (large-cap, mid-cap, flexi-cap, and sectoral). This helps diversify your investment and potentially reduce risk.
• Review your SIPs: Periodically review the performance of your mutual funds and adjust your SIP allocation if necessary.
I hope this helps!