Tuesday, July 23, 2024
Fund

# ET Mutual Fund Explains: Want to know the future value of your monthly investments of Rs 10,000? Use this formula

Mutual fund investors make monthly investments or SIP investments of a minimal amount they can spare after paying out all bills, making all payments and keeping aside an amount for emergencies. Let us suppose, they make a monthly SIP of Rs 10,000 for around 5 years. Investors want to know what will be the future value of their monthly investments after 5 years.

These investors can use a formula to find out the future value of their SIP investments. This formula gives a rough idea of how the monthly investments will grow over a period of five years.

Future Value (FV) = P [ (1+i)^n-1 ] * (1+i)/i

In this formula:

FV = Future value or the amount you get at maturity.

P = Amount you invest through SIP

i = Compounded rate of return

n = Investment duration in months

Example, A is investing in a mutual fund scheme through a monthly systematic investment plan (SIP) of Rs 10,000 for an investment period of 10 years with an expected rate of return of 10%.

The future value of this investment will be Rs 20.48 lakh after 10 years.

Example, A is investing in a mutual fund scheme through a monthly systematic investment plan (SIP) of Rs 10,000 for an investment period of 10 years with an expected rate of return of 12%.

The future value of this investment will be Rs 23 lakh after 10 years.

Example, A is investing in a mutual fund scheme through a monthly systematic investment plan (SIP) of Rs 10,000 for an investment period of 10 years with an expected rate of return of 15%.

The future value of this investment will be Rs 27.52 lakh after 10 years.