Sachin Gupta
by
5paisa Research Team
18th Nov 2024
Trying to make retirement secure by investing in MF? SIP of Rs 5000 in this index fund likely returns Rs 1.5 crore
5paisa Research Team
Last Updated: 18th August 2022 - 04:17 pm
Having financially secure is a dream for many. However, you can likely achieve it via disciplined investment via SIP in this index fund. Read on to find out more about this fund.
It is quite often evident that due to a lack of financial literacy, people find life after retirement quite insecure. According to the Max Life Insurance’s India Retirement Study 2021 report, 45% of people would depend on children for retirement support. Almost 56% believe that savings would be exhausted within 10 years of retirement.
A retirement is a certain event, and there is a good chance that you will live on even after you retire. As a consequence, you will incur expenditures long after you retire.
In this case, the cost might be both anticipated and unexpected. Anticipated costs include home expenses, discretionary expenses, children’s school or college expenses, EMI, savings, and so on. Unexpected costs, on the other hand, include things like medical costs, a fund to compensate for job loss, and so on.
As a result, it is critical to have a retirement plan in place to cover these costs. When you hear the phrase retirement planning, your mind may race with ideas that might land you in a pickle.
Having said that, investing Rs 5,000 each month via Systematic Investment Plan (SIP) in UTI Nifty 50 Index Fund for 30 years accumulates to Rs 1.5 crore assuming it earns a 12% Compounded Annual Growth Rate. However, the question is does this fund really have the potential to generate these returns? Let’s find out.
Nothing better than analysing the rolling returns of the fund to understand its consistency. So, here we analysed Net Asset Value (NAV) data of UTI Nifty 50 Index fund from August 21, 2012, to August 17, 2022.
|
UTI Nifty 50 Index Fund |
1-Year |
3-Year |
5-Year |
7-Year |
|
Median Rolling Returns (%) |
12.7 |
11.8 |
12.8 |
11.7 |
|
Minimum Rolling Returns (%) |
-33.0 |
-5.0 |
-1.6 |
4.5 |
|
Maximum Rolling Returns (%) |
95.0 |
22.6 |
18.5 |
15.1 |
|
Number of times rolling returns were negative (%) |
15.2 |
1.3 |
0.3 |
0.0 |
From the above table we can say that the median returns work around 12% to 13%. Moreover, ignoring the 1-Year rolling returns period, in all the other periods the chances of negative returns is quite low. Seven-years and above is better as chances of negative returns is lowest.
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