Through mutual fund SIP, you can accumulate a lot of money in the long run, but if you invest top-up in it, then in a few years you will accumulate so much money that in old age you will not understand how to manage it. Understand its complete math here.
Retirement Planning: Wise people are those who start investing while they are still employed and that too in a way that can secure their present as well as their future i.e. life after retirement. For this, it is important that we diversify our investments and keep some schemes in them through which we can collect maximum retirement funds. The sooner you start investing, the longer you will be able to invest and the more funds you will collect.
Now the question is where to invest for retirement? The answer is Mutual Fund SIP. If you start SIP at the age of 30, you have to invest till the age of 60. This way you will get 30 years to add retirement fund. In this time you can add a very big fund through SIP. On the other hand, if you put annual top-up in it, then in 30 years you will add so much money that in old age you will not understand how to manage it. Know here what you have to do-
First understand the strategy of top-up in SIP
Generally, when you start SIP, you invest a fixed amount in it every month. But Top-Up SIP is such a facility in which you can add some amount to your regular SIP. Here you have to put a top-up of 10 percent every year. It can be understood like this that you started a SIP of Rs 5,000 at the age of 30.
In the initial year, you have to invest only Rs 5,000 every month. But in the next year, you have to increase it by 10 percent of Rs 5,000, i.e. Rs 500. That is, the investment amount has to be made 5,500. In the next year, you have to increase 10 percent of 5,500, i.e. Rs 550. In this way, your SIP will become Rs 6050. As your salary increases every year, you have to increase the amount of the current SIP by 10 percent every year. With this strategy, you have to invest for the entire 30 years.
Know how much money will a SIP of 5,000 add?
If you invest with this strategy and apply a top-up of 10 percent year after year in the SIP started with 5,000, then in 30 years you will invest a total of Rs 98,69,641, but will get more than 3 times the return on it. At an average return of 12% in 30 years, you will get Rs 3,43,00,976 on your total investment as interest only and at the age of 60, you will get a total of Rs 4,41,70,618 including the investment amount and interest.
On the other hand, if your SIP gives a return of more than 12% i.e. up to 15%, then on a total investment of Rs 98,69,641, you will get Rs 6,52,41,708 as interest only and the total amount will be Rs 7,51,11,349. This will be so much for your old age that you will have to use a lot of brain to manage it.
