How Much Return Can I Expect from an SIP of $12,000 for 3 Years?
The market, the type of investment, and the state of the economy are some of the variables that affect investment returns. For more precise estimates, it is advisable to consult a financial counselor or utilize investment calculators.
Investment Strategy Insights
One of the key strategies for successful investing is to make regular investments rather than a lump sum. Systematic Investment Plans (SIPs) are particularly beneficial as they allow you to invest a fixed amount at fixed intervals, often leading to better returns than a lump sum investment. Additionally, SIPs help in averaging the cost of investment over time, which can be beneficial, especially in fluctuating markets.
Top Mutual Funds for SIP
Currently, the best choice for SIPs is mutual funds offered by renowned companies like AXIS, SBI, DSP, or Aditya Birla. However, it's important to note that Aditya Birla Mutual Funds have a less favorable online presence. They had issues with their mobile services in the past and the same can be expected with their online investment platforms. Therefore, one should avoid investing in their mutual funds.
Predicted Returns from an SIP of $12,000 for 3 Years
Investing $12,000 every month for 3 years in a good mutual fund could potentially yield a return between $540,000 and $555,000. It is essential to remember that the three-year horizon is relatively short, and the final maturity amount can vary significantly depending on market conditions.
On average, an annual interest rate of 12% can be expected, though it varies based on the category of funds, such as large-cap, mid-cap, small-cap, diversified, or thematic funds. Investing over a longer term, say five years or more, could provide better returns due to the compounding effect.
Return Projections
Assuming a 8% annual return compounded, the estimated maturity amount could reach up to $504,880.1. It is vital to understand that these figures are approximations and the actual returns may differ. If you invest for a three-year period in a large-cap SIP, you might expect an overall return of around 10%, but the actual figure may vary.
Recommended Balanced Scheme
For a three-year horizon, a balanced scheme through SIP would be an ideal investment. You can expect a Compound Annual Growth Rate (CAGR) in the range of 14-16%.
Risks and Disclaimers
All mutual fund and securities investments are subject to market risks, and there can be no assurance that the funds' objectives will be met. Investing in mutual fund units involves investment risks, such as trading volume settlement risk, liquidity risk, default risk, including the possible loss of principal.
Personalized Investment Advice
If you are looking for personalized investment advice, you may write to the author directly at [email protected]