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Mutual fund calculator: Ravi Prakash Ujjwal has two sons aged 12 and 8 years. He has ample investments for the higher studies of his elder son but now he is planning to invest for the higher education of his younger son. As per his assessment, education inflation in India is around 10 per cent per annum. So, cost of higher education that is around ₹20 lakh today, would go up to ₹50 lakh when his younger son would become 18 years of age — an ideal age when higher studies of a child starts.
On how much monthly mutual fund SIP would be required for Ravi to achieve his ₹50 lakh investment goal in next 10 years; Amit Gupta, MD at SAG Infotech said, "A ₹50 lakh corpus requires ₹21,000 to ₹22,000 per month in SIP if the individual go by the average rate of expected return at 12 per cent for 10 years (120 months). One can also lower the same SIP at 18,000 per month if the expected rate of interest return would yield around 15 per cent. The fund manager is always there to help in creating a better scenario for the investor and may show a good company to invest in. Some mutual funds do offer over 50 per cent interest and some may even take in losses. It is all about the right investing and researching. But going through the thumbs up rule, ₹18,000 to ₹21,000 is the average SIP one can do at lowest possible scenario for the desired corpus. However, all these returns are highly volatile and come up at own risk."
The Managing Director of SEBI registered firm went on to add that one should increase one's SIP with increase in one's income. It helps an investor start mutual fund SIP at lowest possible monthly SIP and said, "A 50 ₹lakh ( ₹51,19,425) corpus will require ₹15,000 per month in SIP if individual go by the average rate of expected return at 12 per cent for 10 years (120 months), with an annual step-up of 10 per cent. The fund manager is there to help in creating a better scenario. But going through the thumbs up rule, ₹14,000 to ₹15,000 is the average SIP one can do at lowest possible scenario for the desired corpus."
Advising Ravi to go for 15 per cent step-up SIP and remain assured about his investment goal; Vinit Khandare, CEO at MyFundBazaar India Private Limited said, "To accumulate ₹50 lakh in 10 years via mutual fund SIP, the SIP amount is 12,500 with 15 per cent increase every year with rate of interest 12 per cent per annum for a duration of 10 years."
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