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News Topical, Digital Desk : Investors are increasingly investing in mutual funds these days. The minimum expected return is 12 to 14 percent. However, this return depends on the fluctuations in the stock market. Today, we'll use SIP calculations to understand how much fund will be created by investing Rs 4,000 per month for 5 years.
calculation
- Investment amount – Rs 4000
- Investment return – 12%
- Investment period – 5 years
If an investor invests Rs 4,000 per month in a SIP for 5 years, they will receive Rs 330,000. Over these five years, the principal alone will grow to Rs 240,000. You could earn up to Rs 90,000 in returns alone. However, this return depends entirely on the fluctuations in the stock market. Now, let's understand how much you should invest based on your salary.
How much should one invest according to salary?
If you want to invest in a SIP or any other scheme, you can follow the 50:30:20 rule. Simply put, before investing, you need to divide your salary into appropriate portions to cover your expenses and save easily.
We'll use this formula to calculate your SIP investment amount. This rule requires you to divide your salary in a 50:30:20 ratio.
You can use 50% of the amount for expenses.
30% of the money should be used for personal items or entertainment.
You can use 20% for savings.
Let us now understand this with the help of an example.
Understand with an example
Suppose your salary is ₹30,000. You can use ₹15,000 for essential expenses. Additionally, you can spend 30% of this amount, or ₹9,000, on personal items. You can also use 20% of this amount, or ₹6,000, for savings.
If you prefer, you can invest this entire savings amount in a SIP. Or, you can invest Rs. 3,000 in a SIP and Rs. 3,000 in a secure platform. The longer you invest through SIP, the greater your profits.
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