Mutual Fund SIP: This is the formula to earn Rs 3 lakh every month after retirement – Mutual Fund SIP: This is the formula to earn Rs 3 lakh every month after retirement
Systematic Investment Plan (SIP) has become very popular among salaried professionals. In which instead of putting a lump sum amount, a small part of your earnings has to be invested per month. According to experts, mutual funds give at least 10 percent return on SIP investment in the long term. Small investors can use a mutual fund calculator to calculate their post-retirement income through SIP investments.
Many people save to accumulate money, so that they do not have to work in old age. A family that sends Rs 40,000 to Rs 45,000 per month would currently need around Rs 3 lakh per month keeping inflation in mind. In this case, long term SIP can be used for accumulating retirement funds. Let us try to understand that for how much time you need to do SIP every month to earn Rs 3 lakh every month after retirement.
How much SIP required: Here it is very important for us to keep inflation in mind. Taking into account the inflation of 6 to 6.5%, the household expenditure of Rs 40 to 45 thousand will translate to Rs 3 lakh in the coming few decades. Therefore, it is very important for investors to keep this monthly target in mind while saving for their future. Experts say that taking into account the life expectancy of 25 years and inflation of 6 per cent, a person would need around Rs 7.2 crore to generate an income of Rs 3 lakh per month post retirement. For this, an investor will have to invest Rs 7.2 crore in a systematic withdrawal plan, where he will get 8 per cent return, which is two per cent more than the 6 per cent annualized inflation rate.
Do SIP for 30 years: If you are 30 years old then you will have around 30 years to accumulate your retirement fund. However, the initial monthly SIP of such an investor should not be equal to the final SIP installation. Because with the passage of time the income increases. In such a situation, the investor should increase his SIP by 10 percent every year to reach his target as soon as possible.
Also keep in mind the income tax: Income tax is also a major threat to one’s investment. Which also needs to be kept in mind while planning for retirement. After investing in SIPs for a period of 30 years, the investor can expect a gross return of 12 per cent or a return after tax of 10 per cent. Considering an overall return of 12 per cent or 10 per cent post-tax return on a monthly SIP of 30 years, a corpus of Rs 9.61 crore is required to be created as per the Step Up Mutual Fund SIP calculator. Which will be Rs 7.61 crore after tax. According to the mutual fund calculator, one needs to start a SIP of Rs 12,000 per month to meet the monthly income of Rs 3 lakh per year over the next 30 years.
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