How much of my salary should go into SIPs? (2024)

I am a 30-year old professional with a gross salary of 2 lakh. How much should I invest every month in a systematic investment plan (SIP)?

—Rajesh

You must strive to save at least 30% of your gross income or 60,000 every month. To calculate how much amount you should invest in SIPs, we will have to use the standard formula, which is 100 minus your age to be invested in equity through mutual funds. Going by this calculation, you should invest 42,000 or 70% of your monthly savings of 60000 in SIPs.

To round it off, you may begin with an SIP of 40,000. You should divide the amount in five SIPs of 8,000 each. The first two SIPs should be in two different large cap funds, the third can be in some good mid cap fund, the fourth SIP of 8,000 can be invested in a flexi cap fund and the fifth one can be in any theme of your choice like a small cap fund or special situation fund or an international equity fund or FMCG fund, etc.

I want to start investing in mutual fund SIPs. Can you please recommend the names of schemes that have a track record of at least 15 years and where the annual performance has been higher than 15% per annum?

—Reena

The tenure of the scheme is always very helpful in taking a decision as schemes with a long track record are considered better as compared to recently started schemes. However, the past performance may or may not be repeated in future and you should not base your decisions purely on the length of the scheme and the past track record of the scheme.

Nonetheless, to answer your question, here are five such schemes which were launched more than 15 years ago and where the performance has also been higher than 15% per annum on a CAGR (compounded annual growth rate) basis:

1. HDFC Flexi Cap Fund —launched on 1 January 1995.

2. Canara Robeco Emerging Equities Fund—launched on 11 Mach 2005.

3. Kotak Emerging Equity Fund—launched on 30 March 2007.

4. Kotak Small Cap Fund— launched on 24 February 2005.

5. ICICI Prudential Equity and Debt Fund—launched on 3 November 1999.

The past performance of all of the above schemes has been higher than 15% per annum on a CAGR basis. However, we again caution you not to take your decisions primarily based upon the past performance alone as it may or may not be repeated in future.

Rajiv Bajaj is chairman and managing director, Bajaj Capital Ltd.

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Published: 29 Mar 2023, 10:44 PM IST

How much of my salary should go into SIPs? (2024)

FAQs

How much percentage should I invest in SIP? ›

To understand it more precisely, if you earn Rs 30,000 per month, you have a good chance to make Rs 1 crore through regular monthly SIP investments in a few years. The golden rule of investment, 50:30:20, says that you should save 20 per cent of your monthly earnings.

Should I invest 50% of my salary? ›

A common rule of thumb is the 50-30-20 rule, which suggests allocating 50% of your after-tax income to essentials, 30% to discretionary spending and 20% to savings and investments. Within that 20% allocation, the portion designated for stocks depends on your risk tolerance.

What percent of salary should go to investments? ›

Generally, experts recommend investing around 10-20% of your income. But the more realistic answer might be whatever amount you can afford. If you're wondering, “how much should I be investing this year?”, the answer is to invest whatever amount you can afford!

How much money do I need to invest to make $1000 a month? ›

A stock portfolio focused on dividends can generate $1,000 per month or more in perpetual passive income, Mircea Iosif wrote on Medium. “For example, at a 4% dividend yield, you would need a portfolio worth $300,000.

What if I invest $10,000 in SIP for 3 years? ›

Mutual Fund SIP calculator shows that a monthly investment of Rs 10,000 in this fund would have grown to approx. Rs 10.9 lakh in three years.

What happens if I invest $1,000 in SIP for 20 years? ›

If you were to stay invested for a shorter duration, say 20 years, you'd invest Rs 2,40,000, but your portfolio value would be Rs 9.89 lakh. A decade-long investment of Rs 1,000 per month would equal Rs. 2,30,038, as compared to Rs. 1,20,000 invested over the same period.

What is the 70 20 10 budget rule? ›

The 70-20-10 budget formula divides your after-tax income into three buckets: 70% for living expenses, 20% for savings and debt, and 10% for additional savings and donations. By allocating your available income into these three distinct categories, you can better manage your money on a daily basis.

What is the 60 20 20 rule? ›

If you have a large amount of debt that you need to pay off, you can modify your percentage-based budget and follow the 60/20/20 rule. Put 60% of your income towards your needs (including debts), 20% towards your wants, and 20% towards your savings.

Is saving 50% of salary too much? ›

At least 20% of your income should go towards savings. Meanwhile, another 50% (maximum) should go toward necessities, while 30% goes toward discretionary items. This is called the 50/30/20 rule of thumb, and it provides a quick and easy way for you to budget your money.

What is the 40 30 20 10 rule? ›

The most common way to use the 40-30-20-10 rule is to assign 40% of your income — after taxes — to necessities such as food and housing, 30% to discretionary spending, 20% to savings or paying off debt and 10% to charitable giving or meeting financial goals.

What is the 50 30 20 rule? ›

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings.

How to make 3k a month in dividends? ›

A well-constructed dividend portfolio could potentially yield anywhere from 2% to 8% per year. This means that to earn $3,000 monthly from dividend stocks, the required initial investment could range from $450,000 to $1.8 million, depending on the yield.

How to make $2500 a month in passive income? ›

Invest in Dividend Stocks

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. Here's a realistic example: Invest $300,000 into a diversified portfolio of dividend stocks.

How to make 1k a month passively? ›

Passive Income: 7 Ways To Make an Extra $1,000 a Month
  1. Buy US Treasuries. U.S. Treasuries are still paying attractive yields on short-term investments. ...
  2. Rent Out Your Yard. ...
  3. Rent Out Your Car. ...
  4. Rental Real Estate. ...
  5. Publish an E-Book. ...
  6. Become an Affiliate. ...
  7. Sell an Online Course. ...
  8. Bottom Line.
Apr 18, 2024

What if I invest $5,000 in SIP for 10 years? ›

The SIP calculator shows that a monthly investment of Rs 5000 in the direct plan of this scheme would have grown to approx. Rs 30.5 lakh in 10 years. Monthly SIP of Rs 5000 in the regular plan would have grown to approx. Rs 28.6 lakh in 10 years.

What if I invest $5,000 in SIP for 5 years? ›

How much is Rs. 5,000 for 5 years in SIP? If you invest Rs. 5,000 per month through SIP for 5 years, assuming 12% return. The estimate total returns will be Rs. 1,12,432 and the estimate future value of your investment will be Rs. 4,12,431.

What if I invest $5,000 in SIP for 20 years? ›

If someone begins a SIP of 5000 per month for a span of 20 years, at 12% assumed annualized rate of return per annum, your total investment in 20 years is Rs. 12 lakh and the accumulated corpus at the end of tenure is close to Rs. 50 lakhs.

What happens if I invest $1,000 in SIP for 10 years? ›

(You must convert the rate of return to the monthly figure through dividing by 12). You also have n = 10 years or 120 months. FV = Rs 1,84,170. So, the future value of a SIP investment of Rs 1,000 per month for 10 years at an estimated rate of return of 8% is Rs 1,84,170.

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