Mutual Funds, one of the best and most used investment options for long-term investment, have consistently shown good performance in terms of returns. Investing in Mutual Funds not only helps the investors to build a large corpus over a long period of time but also gives them access to a good portfolio. One of the cheapest investment plans is Mutual Fund SIP, in which the investor can start investing with just ₹500.
For investors with little knowledge of the market in Mutual Funds, it is best and safest to invest through SIP. If the market is stable and there are chances of going up in future then investing in large cap funds is beneficial. If you want to create a fund of Rs 3 crore in 20 years. For this what should be your monthly SIP investment amount and which fund category should you choose?
Market experts say that investors looking to create wealth over a 20-year or longer period should consider investing in equity large-cap funds or equity index funds. Due to equity exposure, these mutual funds give higher returns than debt funds
Suppose, if a person is planning to accumulate ₹3 crore over a tenure of 20 years then he needs to start a SIP of around ₹30,000 per month (assuming an annual CAGR of 12%).
If you increase your monthly SIP by 10% every year then instead of starting your investment with ₹30,000 monthly you can start with as low as ₹16,000 per month. Note that the Large Cap Mutual Fund category has given a CAGR of 13.15% in the last 10 years, and S&P BSE 100 TRI Index has given a CAGR of 13.28% during the same period.
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