Don’t invest randomly. Here’s how to choose the correct SIP amount

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₹3,000-5,000) to test the waters. In a few years, you saw the growth (potential) of mutual funds and decided to invest more. And now, you invest ₹15,000-20,000 per month.

But is this enough? While investing ₹15,000-20,000 per month is good, the question is whether it will be enough to meet your goals. And that is where the question of ‘correct’ monthly SIP comes in. Let me use a very simple example to explain this.

Suppose you are a married 33-year-old individual drawing a monthly salary of ₹1.4 lakh. Your regular monthly expenses are ₹80,000 per month and hence, you have a monthly surplus of ₹60,000. Like many other mutual fund investors, you too do a monthly SIP (of ₹15,000).

You feel good about it as you are at least ‘saving something’ instead of spending it all. You also have a few goals that you wish to get serious about. First is house purchase.

You want to have a down-payment amount of ₹15 lakh in four years’ time. The second is your child’s higher education, for which you have kept a target of ₹50 lakh in 12 years. The third goal is your own retirement in your hometown (for which you estimated ₹4 crore) in 20 years.

From the size of your goals, it should be clear that a ₹15,000 monthly SIP will never be enough to meet all these goals. So, what is required actually? For this, you can do some number crunching yourself (or check with an investment advisor). But to complete our example, here is what is needed for each of your goals: ₹25,000-26,000 per month for 4 years to accumulate your house downpayment (at 20:80 equity:debt allocation).

₹18,000-19,000 per month for 12 years for child’s education (at 60:40 equity:debt). ₹56,000-57,000 per month for 20 years for retirement (at 60:40 equity:debt). So, in total for