Every month, when the message of salary credit comes in the account, among the long list of expenses, the biggest question that arises is how much money should be saved and invested for the future. In today’s era, Mutual Fund Systematic Investment Plan (SIP) has become the most popular means for the common working class to create a big fund by beating inflation. Young professionals from Lucknow, Noida, Bengaluru, Mumbai and across the country are busy preparing for financial security and retirement fund from an early age. However, many people either invest much less than their potential or are overly aggressive and end up in a cash crunch at the end of the month. According to financial experts, there is a scientific and practical parameter to decide the right SIP amount, which depends on the balance of your monthly income, mandatory expenses and financial goals.

The most accurate formula for budget management and investment in the world of personal finance. 50:30:20 rule It is believed. Your in-hand (net) monthly salary should be divided into these three parts:

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  50% Needs: 50% of your total income should be towards house rent/EMI, ration, electricity-water bills, children’s school fees and basic medical expenses.

  
  


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  30% Wants: 30% of the income can be used for lifestyle expenses like dining out, movies, shopping, gadgets and weekend trips.

  
  


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  20% Mandatory Savings & Investments: It is mandatory to save and invest at least 20% for the future. Financial advisors suggest that the largest portion of this 20% (around 15% to 20%) should go directly into SIPs of equity or hybrid mutual funds. If you do not have a huge loan on your head, you can also increase this investment portion to 25% to 35% by cutting down on your ‘Wants’.

  
  

How much SIP should you aim for every month as per your income can be understood with a simple calculation:

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  ₹30,000 monthly salary: Minimum 20% i.e. ₹6,000 per month Start SIP. It can be divided into large-cap index fund or flexi-cap fund.

  
  


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  ₹50,000 monthly salary: Minimum 20% to 25% i.e. ₹10,000 to ₹12,500 per month Invest Rs. It can be divided into flexi-cap (₹5,000), large and mid-cap (₹4,000) and small-cap (₹2,000).

  
  


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  ₹1,00,000 Monthly Salary: at least 30% i.e. ₹30,000 per month Aim for SIP. In this, along with diversified equity funds, some part can also be allocated in debt or ELSS (tax saving).

  
  

To explain the importance of discipline and time in SIP. 15-15-15 rule Considered a milestone. According to this rule:

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  if you ₹15,000 per month Let’s do SIP,

  
  


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  Continuous 15 years continue investing till,

  
  


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  and on average Estimated annual return of 15% If received, after 15 years you will have total ₹1,00,27,601 (over Rs 1 crore in full) A huge fund of Rs. In this, your total accumulated capital will be only ₹ 27 lakh, whereas the wealth gain from compounding will be more than ₹ 73 lakh.

  
  

Instead of sticking to a fixed amount for years, SIP is the smartest strategy Step-up SIP. Every year when there is appraisal or increment in your company, direct an annual increase of at least 10% in your SIP amount. For example, if you started with ₹10,000, make it ₹11,000 next year and ₹12,100 the year after that. This small annual increase of 10% almost doubles your final maturity corpus in 20 years compared to a normal SIP.

It is essential to have two financial safeguards in place before investing your first rupee in a mutual fund:

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   Emergency Fund: Keep aside an amount equal to at least 6 months of mandatory expenses (ration, rent, EMI) in a savings account or liquid fund, so that there is no need to break the SIP midway due to job or medical emergency.

   
   


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   Term and Health Insurance: For financial protection of the family, take term insurance at least 15 to 20 times your annual income and adequate health cover, so that the invested capital remains safe in case of any untoward incident.

   
   

Growth projection of ₹10,000 monthly SIP over different time periods (at 12% annualized expected return)