Achieving financial freedom requires you to have a clear financial roadmap. You need to first identify your goals and then define them in terms of the required goal amount and time horizon to reach the goal. When it comes to long-term goals such as retirement, home buying, or children’s higher education, mutual funds are the most preferred and popular investment options available. To reach the desired long-term goal, you need to plan thoroughly and know how much to invest in mutual funds to reach the target goal amount.
How can you estimate monthly contributions for mutual fund investment?
The amount of investment that you need to make in any systematic investment plan (mutual fund SIP) is dependent on the goal amount and the time frame to achieve the goal. It is essential to have an estimate to reach the goal without any hassles.
Let’s understand this with an example. Let’s say you are planning to build a corpus of INR 2 Crs for your retirement that is 30 years ahead. How much should you contribute monthly to an equity mutual fund SIP (that could deliver an expected rate of return of 12%) to reach this goal amount in the next 30 years?
You can calculate this using the below formula:
FV = P [(1+i) n-1] X (1+i)/i
In this formula,
FV = Estimated future value of the SIP mutual fund
P = Amount of investment into mutual fund SIP (in each installment)
i = Expected rate of return
n = Investment period or time frame in months
Calculating the estimated amount of monthly contribution towards equity mutual fund SIP manually is quite challenging. SIP investment grows with a compounding effect. However, there is no need to worry when you have a mutual fund calculator online that can help you calculate the estimated monthly contribution for investment growth. So, what is this mutual fund calculator online?
A mutual fund return calculator is an online utility tool that is highly valuable. Using a mutual fund calculator online, you can calculate the monthly contribution that you need to put in an equity mutual fund SIP to achieve your target amount after a specified period. A mutual fund return calculator is a convenient and simple to use online tool that only needs a few basic details to estimate the monthly contribution amount within a few seconds.
In the above example, you need to invest INR 5,000 monthly for 30 years to achieve the goal amount of INR 2 Crs provided the investment grows at a 12% expected rate of return. This is calculated using a mutual fund calculator online. Here is a simple step to using a mutual fund return calculator:
- Access mutual fund return calculator online
- Choose a monthly SIP option
- All you need to do is input your monthly contribution amount, period of investment, and the investment strategy chosen by you. (12% expected rate of return for aggressive strategy, 8% expected rate of return for balanced strategy, and 6% expected rate of return for conservative strategy and you can also customize your investment strategy.
- That’s all you need to do! Click on calculate option to know whether you can achieve the set target with the monthly contribution that you intend to invest in mutual fund SIP.
However, it is important to note that the mutual fund calculator online does not take into consideration of expenses ratios, exit load, or any other charges applicable to your investment. You can estimate the mutual fund monthly contribution required for investment growth based on your investment strategy, goal amount, and time horizon using a mutual fund return calculator.
0
Sign in to leave a comment.