Resize your mutual fund SIPs according to money goals

Dream big! You would have often heard your seniors and elders asking you to set bigger dreams for yourself. Once you have a clear picture of what you want to achieve and own a few years down the road, the going becomes easy.

Owning a Villa in a posh community, or seeing yourself behind the wheels of an Audi or BMW or even taking your spouse and kids on a world tour, the bucket list is endless. But one thing is certain: it's possible to have that kind of financial freedom. No matter how unrealistic or unachievable it might look, you can shape your future and achieve what you always strive for.

You just have to make your money work harder for you. Besides helping you to achieve your long-term goals such as children’s education, marriage, home-buying or your own retirement, mutual funds can help you meet your bigger dreams.

A mutual fund is an investment avenue that can help translate dreams into reality. SIPs (systematic investment plans) and the power of compounding can work wonders with the way you invest and see your dreams realized.

The route to create wealth is easy with mutual funds. Start with building a portfolio of a few consistently performing equity mutual fund schemes. Estimate how much you need to save towards the goal and start investing through SIPs.

Big SIPs, bigger dreams

Let's look at the numbers. A luxury product costing around Rs 40 lakh can be all yours in five years with a monthly SIP of about Rs 48000 (assuming growth of 10 percent a year). Whether it’s a buying a luxury car or purchasing a Villa with your own funds without having to take a home loan, big-ticket SIPs are meant for big dreams. A monthly SIP of about Rs 45000 (assuming growth of 12 per cent per annum) is required to own a house of your own, costing Rs 1 crore, all with your own funds without having to get it on a home loan.

If you are looking at a shorter duration, then by investing Rs 75,000 a month for 7 years through SIPs, you end up saving Rs 1 crore.

SIPs are only one part of the long term story of wealth creation. Stock market movements are not linear and can be volatile. Therefore, make sure you don't miss the opportunities to invest more when there are corrections or market dips. Over the longer term, equities have delivered high inflation-adjusted returns compared to other asset classes.

Also read: How asset allocation must vary for different money goals

Role of an advisor

The selection of the right mutual fund schemes for SIPs is an equally important task. You not only have to determine your own risk profile and asset allocation suiting your goals, you also need to pick the right fund from amongst several thousands of schemes. Equipped with the latest research reports and updates of the economic environments, the role of a financial advisor attains importance to build wealth consistently over the long term.

The golden rule

Presently, you are earning well and obviously you would like to maintain or even upgrade your lifestyle as you age and see your income rise. To convert your dreams turn into reality, you need to have a robust financial plan and the determination to stick to it. The trick is simple–keep saving a fixed amount each month towards your dreams. And, make sure you stick to the golden rule of 'income minus savings equals expenses', which makes sure you spend only what is left after you have allocated the amount towards the goals. Plan to save towards your bucket list and see them come alive with SIPs!