Whether you are a beginner or an expert when it comes to personal finance, financial resolutions should be proactively addressed as we say goodbye to 2022 and welcome a new year in 2023. Making SIP investments is generally suggested for building your wealth since it enables you to optimise your returns by altering your SIP in any market circ*mstance. Given the benefit of compounding and the advantage of rupee cost averaging, investing through SIPs for long-term goals is a good way to grow your wealth. We have taken an example here, considering if you have a moderately-aggressive risk profile who plans to accumulate ₹50 Lakhs in the next 5 years. So how much SIP is required per month and which mutual funds can be suitable to your risk profile?
Based on an interview with CA Manish P Hingar, Founder at Fintoo, your question is addressed here. The spokesperson said it is always the right idea to do goal-based investments rather than just investing your money without any goal in mind. This approach involves identifying the amount of money needed to reach a particular goal, determining the amount of time available to reach the goal, and considering the investor's risk tolerance and other factors that may affect the success of the investment plan.
Now for the individual with a moderately-aggressive risk profile who plans to accumulate ₹50 Lakhs in the next 5 years, it is suggested to invest in categories such as Flexi cap funds or Multicap funds which invest in a diversified mix of stocks across any market segment and sectors. For example, if an individual plan to accumulate ₹50 lakhs over the tenure of 5 years, assuming the individual invests in a Flexicap fund or a Multicap fund which is giving an annualized return of 15%, then the individual needs to invest ₹55,750 per month for 5 years in order to generate the required corpus.
Having said that, mutual fund schemes such as HDFC Flexi cap Fund and Nippon India Multicap Fund have given a stellar return of 19.40% and 15.90% respectively in the current year as compared to their category average of 2.59% and 5.91% respectively in the same period. These two funds have been consistent performers over the years because of their diversified asset allocation and investment strategies that have helped them to be resilient to market downturns.
It's also a good idea to carefully research and compare different mutual funds before making a decision to ensure that you choose a fund that aligns with your investment goals and risk tolerance.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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ABOUT THE AUTHOR
Vipul Das is a Digital Business Content Producer at Livemint. He previously worked for Goodreturns.in (OneIndia News) and has over 5 years of expertise in the finance and business sector. Stocks, mutual funds, personal finance, tax, and banking are among his specialties, and he is a professional in industry research and business reporting. He received his bachelor's degree from Dr. CV Raman University and also have completed Diploma in Journalism and Mass Communication (DJMC).
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Published: 01 Jan 2023, 08:04 PM IST
