Need Expert Advice?Our Gurus Can Help

Ramalingam Kalirajan |8334 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on May 20, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more

Asked by Anonymous - May 16, 2024Hindi

Listen

I am 40 yrs old working in central govt. I want to know how much Mutual Fund SIP should I have per month to get a return of 2 crore in 18 yrs

Ans: Planning Mutual Fund SIPs for Long-Term Wealth Accumulation
Understanding Your Financial Goal
It's commendable that you're proactively planning for your financial future. Setting a clear goal is the first step towards achieving financial success.

Analyzing the Investment Horizon and Target Corpus
With an investment horizon of 18 years and a target corpus of ?2 crore, you have a reasonable timeframe to work with.

Estimating Required SIP Amount
To calculate the required SIP amount, we'll consider factors such as expected rate of return, inflation, and compounding.

Factoring in Expected Rate of Return
Given the long-term nature of your goal, a balanced approach with a mix of equity and debt funds can be suitable. Historically, equity investments have yielded higher returns over the long term, albeit with higher volatility.

Considering Inflation and Compounding
Inflation erodes the purchasing power of money over time. Hence, it's essential to account for inflation when estimating your target corpus. Additionally, compounding plays a crucial role in accelerating wealth accumulation, especially over extended periods.

Constructing a Hypothetical Portfolio
Based on your risk tolerance and investment horizon, we can construct a diversified portfolio comprising equity and debt funds.

Assessing SIP Amount
The required SIP amount can vary depending on the expected rate of return and the frequency of investments. By using SIP calculators or consulting with a Certified Financial Planner (CFP), you can determine the optimal SIP amount to achieve your target corpus.

Benefits of Actively Managed Funds
Actively managed funds offer the advantage of professional fund management, wherein experienced fund managers actively research and select investment opportunities. This active management can potentially lead to superior returns compared to passively managed funds.

Risks of Direct Stock Investing
Direct stock investing requires significant time, expertise, and research to build a well-diversified portfolio. Moreover, individual stocks are subject to market volatility and company-specific risks.

Advantages of Regular Funds Investing through MFDs with CFP Credentials
Investing through a Certified Financial Planner (CFP) accredited Mutual Fund Distributor (MFD) offers several benefits, including personalized advice, portfolio monitoring, and access to a wide range of funds. Regular funds may have slightly higher expense ratios than direct funds, but the guidance provided by an MFD can outweigh this difference.

Conclusion
By systematically investing in mutual fund SIPs aligned with your financial goals and risk tolerance, you can work towards achieving a target corpus of ?2 crore in 18 years. Regular review and adjustments to your investment strategy, as well as staying focused on the long term, are crucial for success.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.