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Ramalingam Kalirajan |7367 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on May 13, 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

Question by Kishor on May 07, 2024Hindi

I am 45 years now. I have started investing in 10 mutual funds 8k each amounting to Rs8000 monthly SIP. Funds like contra, growth, hybrid, flexi, midcap, smallcap. My goal is to fetch 1Cr after 5 years. How much should I have to increase the sip amount every year to reach this goal?

Ans: Your commitment to investing is commendable, and your goal of accumulating 1 crore in 5 years is ambitious yet achievable with prudent planning. Let's assess the adjustments needed in your SIPs to reach this milestone.

Given your current SIP of 8k per fund per month across 10 mutual funds, totaling 80k monthly, we can evaluate the required increase in SIP amount annually to meet your target.

Firstly, we'll need to estimate the expected rate of return on your mutual fund investments. Since you've invested across various categories like contra, growth, hybrid, flexi, midcap, and smallcap, your portfolio's expected return could vary based on market conditions and fund performance. Historically, equity investments have yielded returns ranging from 12% to 15% over the long term.

Assuming a moderate annual return of 12%, we can use a financial calculator or formula to determine the required SIP amount increase.

Considering the compounding effect, you would need to increase your SIP amount by approximately 20-25% annually to reach your 1 crore target in 5 years.

However, this calculation is based on various assumptions and market conditions, which may fluctuate. Therefore, it's crucial to periodically review your investments and adjust your SIP amounts accordingly to stay on track towards your goal.

Additionally, consulting with a Certified Financial Planner can provide personalized insights and strategies to optimize your investment approach and ensure you're making informed decisions aligned with your financial objectives.

In summary, increasing your SIP amount annually by around 20-25% can help you achieve your target of accumulating 1 crore in 5 years, provided that your investments generate expected returns. Regular monitoring and professional guidance are key to navigating market dynamics and achieving your financial goals.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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