Mutual funds: If you want to accumulate ₹50 lakh in 12 years, all you need is consistent savings over a period of time. It is recommended to start an SIP (systematic investment plan) and continue it over a period of time to be able to meet your financial goals.

Consistent saving via SIPs provides the twin benefits of compounding and rupee cost averaging, enabling investors to meet their financial goals in time. In other words, you can manage to meet your financial goals if you continue investing in some specific mutual fund schemes over a reasonably long period of time – say 12 years or so.

However, how large the SIP should be is a big question. The amount of SIP, in fact, is contingent on the rate of return delivered on your investment. The higher the rate of return, the lower the SIP. Conversely, the lower the return, the higher the SIP amount.

Here, we give a lowdown on the amount of SIP required to be able to accumulate ₹50 lakh in a dozen years.

There could be multiple scenarios as listed below:

I. Annualised rate of return is 12%: When the mutual funds wherein you have invested deliver a high return of 12%, the SIP amount should be ₹15,671. Total investment would be ₹22.57 lakh, as shown in the SIP Calculator.

II. Annualised rate of return is 11%: When the annualised rate of return is slightly lower, i.e., 11%, the required amount of monthly SIP would be ₹16,844, thus raising the total investment to ₹24.26 lakh to save ₹50 lakh.

III. Annualised rate of return is 10%: Now, if the funds in which you have invested deliver an annualised return of 10%, you would need a monthly SIP of ₹18,087, thus raising the total investment to ₹26.05 lakh.

IV. Annualised rate of return is 9%: Finally, if your investments deliver a slightly lower return of 9%, you would need a monthly SIP of ₹19,401, thus raising the total investment to ₹27.94 lakh.

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