Here’s a look a how much time it will take for you to accumulate Rs 50 lakh for home buying through Mutual Fund SIP at 12% returns
Mutual Fund Systematic Investment Plan (SIP) is considered a good option for accumulating wealth to attain different goals, including home buying. While you can buy a new house or flat at any time by availing of a home loan, it typically requires you to pay 20% of the property price from your own pocket while the rest of the cost is covered by the bank.
Experts advise that it is always better to keep the loan amount low. To do so, you will need to maximise your savings. Here’s a look a how much time it will take for you to accumulate Rs 50 lakh for home buying through Mutual Fund SIP (assuming 12% returns).
Rs 10,000 SIP: It will take 15 years to get Rs 50 lakh from Mutual Fund SIP if the annualised rate of return is 12%.
Rs 20,000 SIP: It will take 10 years and 6 months to get Rs 50 lakh from Mutual Fund SIP if the annualised rate of return is 12%.
Rs 25,000 SIP: It will take 9 years and 2 months to get Rs 50 lakh from Mutual Fund SIP if the annualised rate of return is 12%.
Rs 30,000 SIP: It will take 8 years and 2 months to get Rs 50 lakh from Mutual Fund SIP if the annualised rate of return is 12%.
Also Read: Way to get your first Rs 1 crore fast from Systematic Investment Plan
Rs 40,000 SIP: It will take 6 years and 9 months to get Rs 50 lakh from Mutual Fund SIP if the annualised rate of return is 12%.
Rs 50,000 SIP: It will take 5 years and 10 months to get Rs 50 lakh from Mutual Fund SIP if the annualised rate of return is 12%.
Rs 75,000 SIP: It will take 4 years and 3 months to get Rs 50 lakh from Mutual Fund SIP if the annualised rate of return is 12%.
Homebuying with SIP: Time required for Rs 50 lakh
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Rs 1 lakh SIP: It will take 3 years and 5 months to get Rs 50 lakh from Mutual Fund SIP if the annualised rate of return is 12%.
(The calculation above is based on data provided by Funds India Wealth Conversations Report December 2022)
Disclaimer: Mutual fund investments are subject to market risks. There is no assurance or guarantee that a fund will give 12% or even lower returns. Please consult your financial advisor before investing in any mutual fund scheme)
As an expert in personal finance and investment, I've delved deeply into the realm of Mutual Fund Systematic Investment Plans (SIPs) and their role in wealth accumulation for various financial goals, including home buying. The efficacy of SIPs in wealth creation relies on several factors: the chosen investment amount, duration, expected returns, and risk considerations.
The article you provided offers a comprehensive breakdown of the time required to accumulate Rs 50 lakh for home buying through Mutual Fund SIPs at a presumed annualized return rate of 12%. The SIP amounts ranging from Rs 10,000 to Rs 1 lakh demonstrate the inverse relationship between the invested amount and the duration required to reach the target corpus.
Here's a detailed analysis of the concepts used in the article:
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Mutual Fund SIP: This is an investment method allowing individuals to invest regularly in mutual funds, typically monthly. It aids in wealth creation by enabling investors to benefit from rupee-cost averaging and compound interest over time.
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Annualized Rate of Return: This indicates the average yearly gain or loss on an investment over a specified period, in this case, assumed at 12%. It's a crucial factor in calculating the growth of investments.
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Home Loan & Savings: The article emphasizes the importance of minimizing the loan amount by maximizing savings. SIPs, in this context, offer a disciplined approach to savings, potentially reducing the loan amount required for purchasing a home.
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Investment Amount & Duration: The article illustrates how different SIP amounts affect the time needed to accumulate Rs 50 lakh. Higher SIP amounts result in a shorter duration to achieve the target, showcasing the power of larger investments compounded over time.
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Risk Disclaimer: The disclaimer provided at the end is critical, reminding investors of the inherent market risks associated with mutual fund investments. It urges individuals to seek advice from financial advisors before investing.
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Wealth Conversations Report: The article references data from the Funds India Wealth Conversations Report from December 2022. This source likely provides insights into investment trends, performance analysis, and market outlooks relevant to Mutual Fund SIPs.
In summary, the article effectively outlines the relationship between SIP investments, their durations, and the targeted corpus for home buying. It underscores the significance of consistent savings, investment discipline, and the potential benefits of Mutual Fund SIPs in achieving financial goals. However, it also responsibly highlights the volatility and uncertainty inherent in market-based investments, urging readers to approach investments cautiously and seek professional advice.
