Mutual Funds/SIP

Mutual Funds / SIP: A Smarter Way to Invest

Mutual Funds are professionally managed investment vehicles that pool money from multiple investors to invest in a diversified portfolio of assets such as stocks, bonds, or other securities. They offer an excellent way for individuals to access expert fund management, market exposure, and diversification with relatively low capital.

One of the most popular ways to invest in mutual funds is through a Systematic Investment Plan (SIP). SIP allows investors to invest a fixed amount at regular intervals—typically monthly. This disciplined approach helps build wealth gradually over time and reduces the risk of market volatility.

Why Choose SIP?

SIP brings the benefit of rupee cost averaging, which means you buy more units when prices are low and fewer units when prices are high. Over time, this helps average out the cost and reduce the impact of market fluctuations. Moreover, SIP encourages financial discipline, making it easier for investors to stay committed to their long-term goals.

Benefits of Mutual Funds SIP:

• Investor's Money is managed by expert fund managers to generate reasonable returns.
• It gives higher return on investment by investing funds in equities.
• Investors can keep money safe with tax efficient returns by investing funds in debt and money market instruments.
• There are different categories in mutual funds so an investor can diversify his portfolio according to future needs.
• Investors can avail tax benefit up to Rs. 1,50,000 by investing in ELSS fund.This benefit is eligible under section 80C of the income tax act.

Whether your goal is retirement planning, children's education, buying a house, or simply building wealth, SIPs provide a structured way to achieve them.

With the power of compounding and regular investing, mutual funds through SIPs can help you grow your savings into a substantial corpus over time.

Types of mutual fund

• Equity Funds
• Hybrid Funds
• Debt Funds

Magic Formula in Action: A Real-Life Illustration

Let’s understand this through the illustrative example of Mr. Manoj, who is currently 70 years old. Mr. Manoj started investing through SIPs from the age of 40 and continued until his retirement at 60. After building his corpus, he transitioned to an SWP to receive a stable cash flow for the next 10 years, up to the age of 70.

Systematic Investment Plan (SIP)

Monthly Investment Amount	₹15,000
Tenure (In Months)	240 (20 Year)
Expected Rate of Return	12.62%
Total Investment Amount	₹36,00,000.00
Total Value At Age 60	₹1,48,73,883

Systematic Withdrawl Plan (SWP)

Investment Amount	₹1,25,00,000
Withdrawal per annum	6%
Monthly Withdrawal Amount	₹62,500
Tenure (In Months)	120 (10 Year)
Expected Rate of Return	9.52%
Total Withdrawal Amount	₹75,00,000
Amount of Estate Available at Age 70	₹1,89,95,168