One of the most important aspects of saving for your future is planning for a stress-free and financially independent retirement. SIP is a tool that allows you to systematically invest in mutual funds with an amount of your choice that helps you build a corpus in the early years of your career.
ACCUMULATION PERIOD: the time when you save and potentially grow the value of your annuity to prepare your retirement needs
How Mutual Fund SIPs have created wealth over the last 20 years?
Let’s see how SIPs have created long-term wealth for investors over the last 20 years. Here we will discuss how SIPs, have created wealth for their investors. This just an illustration of how long term investments in SIPs, have created wealth for investors.
To illustrate, consider a SIP initiated in March 2004 with a monthly contribution of Rs 10,000. By February 2024, the fund’s value reached Rs 1.62Cr, stemming from a total investment of Rs 24 lakhs. This translates to an 16.68% return on investment over a span of 20 years
ANNUITY PHASE
After retiring, it’s essential to secure a stable income flow. An option worth exploring is a SYSTEMATIC WITHDRAWAL PLAN (SWP), which enables gradual withdrawals from mutual funds, offering dependable financial assistance. Allocate a portion of your retirement funds to a fitting mutual fund scheme to ensure withdrawals are in line with your objectives.
Let us look at how an SWP works to plan your retirement
A systematic withdrawal plan (SWP) allows you to take fixed sums from your mutual fund investments on a regular basis, whether monthly or at any other frequency you want. After setting an SWP of your choice, the fund house redeems the required units from your mutual fund holdings and credits the amount to your savings bank account, providing you with consistent cash flows.
To learn more about how a systematic withdrawal strategy works, consider the following example based on historical data.
Let’s examine a scenario where a systematic withdrawal plan (SWP) of Rs 1.50 lakhs per month began on a mutual fund with a lump sum investment of Rs 1Cr made in March 2004 and has persisted until the present day. The present value of the fund will be Rs 6.34 Cr after a cumulative withdrawal of Rs 3.6 Cr. Over time, the balance units in your corpus decrease due to SWP withdrawals, but their value may increase based on asset performance.
In conclusion, mutual funds, SIPs, and SWPs provide a powerful strategy for securing your retirement. By leveraging compounding through SIPs and establishing a steady income with SWPs, you can build a resilient retirement fund. Remember, successful retirement hinges on careful financial planning and disciplined investing. Begin your journey today to pave the path for a fulfilling retirement ahead.
Ready to take control of your retirement? Start or review your retirement plans today by considering Systematic Investment Plans (SIP) and Systematic Withdrawal Plans (SWP). Secure your financial future and ensure a comfortable retirement by taking proactive steps now. Contact us to get started!
The examples above is purely illustrative and meant for investor education purpose only. It is not indicative of the returns you will get from your investments. Mutual fund NAVs are subject to market movements. Mutual Fund investments are subject to market risks, read the offer document carefully before investing