Even as the domestic equity market is in a bull run, a large number of retail investors have been entering it directly or through mutual fund SIPs. According to calculations, a monthly SIP investment of Rs 5,000 in equity mutual funds can make you a crorepati within 26 years.
The monthly SIP contribution in June touched an all-time high of Rs 21,262 crore.
Major mutual funds have given annual returns in the range of 40-90 per cent. Axis Small Cap Fund has given 41.63 per cent return in the past one year, while Aditya Birla Sun Life PSU Equity Fund has given 89.52 per cent gains in a year (between August 2023 and August 2024) on the back of a sharp rally in PSU stocks recently.
Other popular mutual funds, like Parag Parikh Flexi Cap Fund (38.5 per cent gains), Nippon India Small Cap Fund (55.58 per cent), SBI Bluechip Fund (28.27 per cent), Kotak Equity Opportunities Fund (45.21 per cent) and Axis Midcap Fund (46.48 per cent) have also given impressive returns in the past one year.
“Given the mutual fund investments recently, a return long-term return of 12-13 per cent in mutual funds seems comfortable,” according to a market expert, who did not want to be named.
SIP Calculation: Rs 5,000 Per Month
Let’s consider 12 per cent as an average return on long-term SIP investments. If you start investing Rs 5,000 per month for 26 years in the year 2024, your total invested amount will be Rs 15.6 lakh by the year 2050. On your investment, the estimated return (considering 12% annual returns) would be Rs 91.96 lakh in 2050.
The invested amount of Rs 15.6 lakh and the return of Rs 91.96 lakh would fetch you Rs 1.07 crore in 2025.
However, if you invest Rs 15.6 lakh in lumpsum, you total wealth in 2050 would be Rs 2.97 crore, considering the same estimated annual returns of 12 per cent.
Mutual Fund Investment Trends
According to the latest data from the Association of Mutual Funds in India (AMFI), investment in equity mutual funds surged over five-fold to Rs 94,151 crore during April-June 2024. This is significantly higher than the Rs 18,358 crore investment in the corresponding period last year.
This has also pushed the industry’s assets under management (AUM) by 59 per cent to Rs 27.68 lakh crore in June from Rs 17.43 lakh crore a year ago,
Feroze Azeez, Deputy CEO of Anand Rathi Wealth, said strong macroeconomic fundamentals, bolstered by supportive government fiscal policies like higher-than-budgeted tax collection growth, reduced revenue expenditures, and increased capital spending have helped in increasing the allocation to equity mutual funds.
In the past one year, between August 2023 and August 2024, the BSE benchmark Sensex has grown over 22 per cent to hit its record 81,000 level, while the NSE Nifty has surged over 26 per cent to touch its record 25,000 level.
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