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Appraisal season, usually occurring between April and June, is the critical period for performance evaluations, salary hikes, and promotion announcements. Generally, some of us simply ignore the hike and do not target a fruitful outcome out of it. If you are one of those, you may be missing something big. In this article, we have focused on how one can turn a simple 8-10 per cent salary increment to generate a sizeable corpus.
Appraisal Season: How a simple 8-10% salary increment could turn you into a crorepati?
A Step-Up SIP (Systematic Investment Plan), often called a Top-Up SIP, is an automated investment strategy where you increase your mutual fund SIP contribution by a fixed amount or percentage at regular intervals (usually annually). It helps align investments with rising income, combat inflation, and build larger corpuses faster.
So, putting it simply, if you get a salary hike of, say, 10-12 per cent or more, simply top up your systematic investment plan; this way, you may have the chance to achieve your target goal fast and even with a sizeable corpus in total. Let’s understand it with an example:
How a salary increment could turn you into a crorepati?
Suppose you are investing Rs 10,000 in a mutual fund scheme through SIP, and till date, a fund of about Rs 3 lakh has been created. Now, you decide to increase your investment by 10 per cent every year. If the SIP of the investment of Rs 3 lakh is increased by 10 per cent every year, with an average return of 12 per cent every year, a fund of approximately Rs 1 crore could be ready in the next 15 years.
SIP investment plan: 5 funds with good returns
Given below are 5 funds with good returns:
1. SBI PSU Fund has generated an average annual return of 29.49 per cent over the past five years. The fund’s NAV is Rs 40.95, with an asset size of Rs 5,334.01 crore, and an expense ratio of 0.62 per cent. The fund’s standard deviation is 22.60, the Sharpe ratio is 0.99, and the beta is 0.94.
3. ICICI Prudential Bharat 22 FOF has generated an average annual return of 28.69 per cent over the past five years. The fund’s NAV is Rs 36.55. The scheme’s asset size is Rs 2,584.85 crore. The expense ratio is 0.12 per cent, and the expense ratio is 0.62 per cent. The fund has a standard deviation of 18.20, a Sharpe ratio of 0.97, and a beta of 1.10.
4. Invesco India PSU Equity Fund has generated an average annual return of 28.19 per cent over the past five years. The fund’s NAV is Rs 82.50. The scheme has an asset size of Rs 1,334.55 crore. The expense ratio is 0.91 per cent. The fund has a standard deviation of 23.39 per cent, a Sharpe ratio of 0.85, and a beta of 0.96.
5. ICICI Prudential Infrastructure Fund has generated an average annual return of 27.92 per cent over the past five years. The fund’s NAV is Rs 218.66. The scheme’s asset size is Rs 7,553.54 crore. Its expense ratio is 1.18 per cent. Its standard deviation is 16.40, the Sharpe ratio is 0.85, and the beta is 0.60.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
