SIP Calculation: How many years will it take to create a corpus of Rs 5 lakh from a Rs 1,000 SIP? Read the calculation..

There was a time when investors were hesitant to invest in mutual funds. Today, given the attractive returns they offer, everyone wants to invest in them. You can start investing with just ₹100 through SIPs today.

Today, we'll use SIP calculations to understand how long it will take to build a fund of ₹5 lakh from a ₹1,000 SIP every month.

Calculation
Investment amount: ₹1,000 per month
Return: 12%
If a person makes a ₹1,000 SIP every month, they would need to invest for 15 years at a 12% return to build a fund of ₹5 lakh. We've understood the SIP calculations, but the real challenge lies in choosing the right mutual fund.

Let's learn from an expert how to choose the right mutual fund.

We spoke with Farhad Gadiwala, Executive Vice President and Head of Products, UTI AMC. He advises investors to consider certain factors before choosing a fund.

What should you consider?
Farhad Gadiwala says that choosing the right mutual fund doesn't mean chasing past returns. It requires evaluating several factors. First, you need to consider your investment objectives, including your time horizon and risk tolerance.

Illustrate with an example:
For example, if you want to invest for the long term and can tolerate risk, an equity fund would be the right choice. However, if you plan to invest after two or three years and use the funds for something like marriage, education, etc., then hybrid and debt funds would be the right choice. These can provide good returns with lower risk.

Not returns, look at rolling returns
Once you've chosen a category, you need to consider several other factors. For example, don't just look at the fund's returns in 1, 2, and 5 years. Instead, consider how the fund is returning during market fluctuations. Additionally, it's important to consider various risk factors, such as the Sharpe ratio.

Pay close attention to charges
Also, pay attention to charges such as the expense ratio. Also, consider the sectors included in the portfolio, the fund manager, and their performance.

Disclaimer: This content has been sourced and edited from Dainik Jagran. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.