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News Topical, Digital Desk : Mutual funds have become a favorite investment option for investors. There was a time when people avoided investing in mutual funds because they can offer attractive returns, but these returns are subject to market fluctuations.
Today, with the help of SIP calculation, we will understand that by when will a fund of Rs 30 lakh be ready from an SIP of Rs 7000 every month?
calculation
- Investment amount – Rs 7000
- Investment return – 12%
With a monthly SIP of ₹7,000, it would take 14 years of investing to build a corpus of ₹30 lakh at a 12% return. However, this return depends on the stock market, so it could be higher or lower.
Over these 14 years, you can earn ₹30.55,000. Additionally, ₹11.76,000 will be accumulated as investment funds. You can earn ₹18.79,000 in returns alone.
It is important to pay attention to these 6 things before investing
1. AUM (Assets Under Management): The fund's AUM should be at least ₹1,000 crore. A smaller AUM exposes the fund to higher risk, and returns can be volatile.
2. Time Since Existence (Fund Age): The fund should be at least 5 years old. This will give you an idea of its performance in both good and bad market times.
3. Expense Ratio : The lower the expense ratio, the better. Lower expenses mean your profits won't be impacted as much.
4. Alpha: Alpha indicates how well your fund is performing compared to the market index. For example, if the index returned 10% and the fund returned 15%, then alpha 5 indicates that the fund is performing well.
5. Beta: Beta indicates how the fund reacts to market fluctuations. If the beta is greater than 1, the fund is considered risky.
6. Turnover Ratio: This indicates how frequently the fund's portfolio is traded. If the turnover ratio is greater than 40%, the fund is risky, and if it is less than 40%, the fund is relatively safe.
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