One of the topics that appealed to me was investing in mutual funds through SIPs. I am 35 and my monthly gross income is Rs 2 lakh. Please advise me on what kind of schemes I should start investing in through SIPs and how much.
Atul Tandon
By Rajiv Bajaj, Chairman and MD, BajajCapital
Given that you are only 35 years old and earn a monthly gross income of Rs 2 lakh, you have a substantial opportunity to grow your wealth through disciplined investing in the right mutual fund schemes.
To secure your financial future, it’s recommended that you aim to save about 30 per cent of your monthly income, which in your case amounts to Rs 60,000. These savings will play a crucial role in achieving your financial goals.
Let’s factor in your age. There’s a useful formula that suggests you invest a percentage equal to a hundred minus your age in a carefully selected portfolio of Equity Mutual Fund SIPs. That would be 65 per cent (100-35) of your monthly savings, which translates to Rs 39,000 per month (65 per cent of Rs 60,000).
Here’s the next step:You should divide this monthly investment of Rs 39,000into five SIPs of Rs 7,800 each. It’s like diversifying your investment portfolio for better stability and returns.
- For the first two SIPs, consider Large Cap Funds like SBI Blue Chip Fund and Nippon India Large Cap Fund. These tend to be less risky and can provide stable returns.
- The third SIP should be in a Mid Cap Fund like the HDFC Mid Cap Opportunities Fund. Mid-cap funds have the potential for higher growth.
- For the fourth SIP, opt for a Flexi Cap Fund like Kotak Flexi Cap Fund. These funds provide flexibility to invest in different market segments, which can be advantageous.
- Lastly, your fifth SIP can be more thematic. Depending on your risk appetite and investment goals, you can explore options like a Small Cap Fund or a Value Fund.
Besides, understanding your financial goals is key when choosing mutual fund schemes. If you aim for long-term goals such as retirement, buying a house or child's education, Equity mutual funds would be a great investment option considering your current age and risk appetite. These funds invest in equity shares of companies and have the potential to deliver high returns over a long investment period, especially for investors in their early or mid-career like you.
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By commencing investments via SIPs in equity funds, you can reap the benefits of power of compounding, rupee-cost averaging and also alleviate risks associated with timing the market. Risk is spread across over a period due to incremental investing, thereby reducing the impact of market volatility. Further, investing a small, fixed amount regularly makes it a budget-friendly method, creating a habit of saving.
If you are risk-averse, or have short term financial goals, Debt Funds can be a good option. They invest in fixed-income instruments like corporate bonds, government securities, treasury bills, etc. and offer low to moderate returns but with lower risk when compared to equity funds.
Important piece of advice:Always read the offer documents carefully before investing in Mutual Fund SIPs. It’s essential to understand where your money is going.It is crucial to choose fund schemes carefully based on your individual financial goals, risk appetite and investment horizon.Lastly, despite all research and planning, keeping in touch with a financial advisor for personalized advice taking your specific circumstances into consideration would be beneficial.
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(Views expressed by the investment expert are his/her own. E-mail us your investment queries ataskmoneytoday@intoday.com. We will get your queries answered by our panel of experts.)
FAQs
So to answer the question, we believe having one to one-and-a-half times your income saved for retirement by age 35 is a reasonable target. By age 50, you would be considered on track if you have three-and-a-half to six times your preretirement gross income saved.
How to invest 2 lakhs per month in India? ›
There are many investment instruments which you can choose to invest in. These include shares, mutual funds, ETFs, government bonds, etc. The best thing about investing in the stock market is there is something for every type of investor based on their financial goals and risk-taking abilities.
How much to invest in mutual funds to get 1 lakh per month? ›
The corpus of Rs 1.5 crore, if invested in a risk-averse option, with Rs 1 lakh monthly outflow, will last for only 14 years. This may entail the need for an additional corpus of about Rs 65-70 lakh. You could consider a systematic withdrawal plan (SWP) from debt mutual funds, bonds or annuity plans.
How much money do I need to invest to make $1000 a month? ›
Reinvest Your Payments
The truth is that most investors won't have the money to generate $1,000 per month in dividends; not at first, anyway. Even if you find a market-beating series of investments that average 3% annual yield, you would still need $400,000 in up-front capital to hit your targets. And that's okay.
What is a good salary at age 35 in India? ›
Average Income in India by Age
| Age Range | 10% | 90% |
|---|
| Between 25 to 34 years | Rs. 3,900 | Rs. 25,181 |
| Between 35 to 44 years | Rs. 3,900 | Rs. 33,639 |
| Between 45 to 54 years | Rs. 3,900 | Rs. 30,678 |
| Above 55 years | Rs. 3,900 | Rs. 25,002 |
1 more rowMar 21, 2024
Let's factor in your age. There's a useful formula that suggests you invest a percentage equal to a hundred minus your age in a carefully selected portfolio of Equity Mutual Fund SIPs. That would be 65 per cent (100-35) of your monthly savings, which translates to Rs 39,000 per month (65 per cent of Rs 60,000).
What is the safest investment with highest return? ›
Here are the best low-risk investments in April 2024:
- High-yield savings accounts.
- Money market funds.
- Short-term certificates of deposit.
- Series I savings bonds.
- Treasury bills, notes, bonds and TIPS.
- Corporate bonds.
- Dividend-paying stocks.
- Preferred stocks.
The top-performing flexi cap mutual funds include Quant Flexi Cap, JM Flexicap and Parag Parikh Flexi Cap Fund, which have given more than 20% annualised returns in the past five years. Whether they acknowledge it or not, most mutual fund investors choose schemes primarily on the basis of their past performance.
How good is 2 lakh per month in India? ›
A salary of 2 lakh per month provides a stable and guaranteed income, which can be attractive for individuals who prefer financial security and a steady paycheck without the responsibilities and risks associated with running a business.
What is the best time to invest in NPS? ›
You can invest any time during the financial year to get the tax benefit under NPS. Regular investment is always advisable to get benefit of compounding and helps you smooth out market volatility.
2 crore not enough to retire at 40; how to save Rs 3 crore for retirement. Early start has helped build sizeable portfolio.
What if I invest 30 000 a month in SIP for 5 years? ›
What if I invest ₹30,000 in SIP for 5 years? If you invest ₹30,000 per month in a Systematic Investment Plan (SIP) for a period of 5 years, assuming an average annual return of 12% on your SIP investment, using the SIP calculator, your returns will be: Your invested amount will be: ₹18,00,000.
How long to become a millionaire investing $1,000 a month? ›
If you invest $1,000 per month, you'll have $1 million in 25.5 years.
| Monthly contribution | Time to reach $1 million with an 8% annual return |
|---|
| $500 | 33.3 years |
| $1,000 | 25.5 years |
| $2,500 | 16.3 years |
| $5,000 | 10.6 years |
1 more rowNov 20, 2023
One of the easiest passive income strategies is dividend investing. By purchasing stocks that pay regular dividends, you can earn $2,500 per month in dividend income.
How much do I need to invest to get $2000 a month? ›
Earning $2,000 in monthly passive income sounds unbelievable but is achievable through dividend investing. However, the investment amount required to produce the desired income is considerable. To make $2,000 in dividend income, the investment amount and rate of return must be $400,000 and 6%, respectively.
What is the average savings for a 35 year old? ›
The average savings for individuals under 35 is $11,200. Individuals between the ages of 35 and 44 have an average savings of $27,900. Those aged 45 to 54 have an average savings of $48,200. The average savings for individuals between 55 and 64 is $57,800.
How much does the average 35 year old have in savings? ›
Savings by Age
| Age | Average Account Balance | Median Account Balance |
|---|
| Under 35 | $11,250 | $3,240 |
| 35 to 44 | $27,910 | $4,710 |
| 45 to 54 | $48,200 | $6,400 |
| 55 to 64 | $57,670 | $5,620 |
2 more rowsSep 19, 2023
Average savings by age
| Age | Median bank account balance | Mean bank account balance |
|---|
| <35 | $5,400 | $20,540 |
| 35-44 | $7,500 | $41,540 |
| 45-54 | $8,700 | $71,130 |
| 55-64 | $8,000 | $72,520 |
2 more rowsFeb 29, 2024
Overall, the rule of thumb is to judge by your salary. Typically, by the time you enter retirement you want to have 10 times your annual salary saved up in your retirement fund. One common benchmark is to have two times your annual salary in net worth by age 35.
