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News Topical, Digital Desk : While mutual funds can be invested in a variety of ways, SIPs are the easiest way to invest. Today, we'll explore SIP calculations to understand how much a person would receive after 10 years if they invest Rs 1,000 per month in a SIP.
Calculation
- Investment amount – Rs 1000 per month
- Investment return – 12%
- Investment period – 10 years
If a person invests Rs 1,000 per month in a SIP for 10 years, they will earn Rs 232,000 at a 12% return. Over these 10 years, your principal will only grow to Rs 120,000. Additionally, you could earn Rs 112,000 in returns.
Investors often face the dilemma of which fund is right for them. Investors are advised to consider certain factors before choosing a fund.
What things should be kept in mind?
Choosing the right mutual fund doesn't mean chasing past returns. It requires evaluating several factors. First, you need to consider your investment objectives, your time horizon, and your risk appetite.
Understand with an example
For example, if you're investing for the long term and have a high risk tolerance, equity funds are the right choice. However, if you plan to invest after two or three years and use the funds for something like marriage, education, etc., hybrid and debt funds are the right options. These can provide good returns with low risk.
No returns, see rolling returns
Once you've selected a category, you'll need to consider several other factors. For example, don't just look at the fund's returns over 1, 2, and 5 years. Instead, consider its returns during market fluctuations. It's also important to consider various risk factors, such as the Sharpe ratio.
Pay special attention to the charges as well
Also, keep in mind the charges such as expense ratio, the sectors included in the portfolio, the fund manager and his/her performance.
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