We all want to achieve financial success in life, but that requires hard work, perseverance, research and the right financial guidance to reach our financial goals in a disciplined manner over a period of time. If you can invest through SIP in mutual funds, your financial success will be in progress and with bit of planning you can even achieve your goals too.

SIP mutual fund lets you invest a fixed amount in mutual fund schemes periodically, monthly or quarterly, over a chosen period of time. As you invest in SIP in a staggered manner, you average out your cost of investments (known as NAV) and benefit from power of compounding. The power of compounding works best when you stay invested for long as you earn return on returns over and above the returns on your investment amount.

Every investor should start SIP with a definite goal in mind. While the goals can differ from person to person based on a lot of factors, let us see how SIP mutual fund can help achieve various goals.

SIP & Child education – With education costs at an all-time high, parents needs to do meticulous planning well in advance in terms of how to give wings to their child’s dream. Be it higher or primary education, the costs are sky rocketing due to steep education inflation and other factors. Considering this, it is safe to invest in SIP and start the journey when the child is very young, preferably after born.

Suppose, Ms. Indira plan to have Rs 20 Lakhs after 10 years for funding her child’s education and she assumes the return to be around 12%, she needs to invest only Rs 8,700 monthly, through SIP mutual fund investment. How this calculation is done? Just use a SIP calculator online and input the goal details and you get the results instantly.  

SIP & retirement planning – Retirement planning is the most important goals of our lives. One should start allocating investments in mutual fund schemes through SIP from very early stages of their careers. You can plan your retirement through SIP return calculator wherein you can input the corpus you wish to accumulate for your retirement, age at which you want to retire and the expected return. Basis these inputs, the SIP calculator will indicate what should be your SIP mutual fund investment amount. 

For example – Anil wants to accumulate Rs 5 Crores for his retirement, he has 25 years to retire and he assumes the inflation to be 6% and the expected return from mutual funds as 11%. Also he wants to start with a small SIP amount and increase the same by 10% annually. After Anil inputs the above in a SIP calculator, the results shows that Anil should start with a monthly SIP amount of Rs 18,647 and increase the SIP amount by 10% every year. If Anil sticks to this plan, he can easily achieve the retirement goal of Rs 5 Crores. 

With the above two examples in this article, we analysed how one can plan SIP in mutual fund using a SIP return calculator and invest in SIP in mutual fund schemes of our choice.