Best mutual funds to build a retirement corpus of Rs 5 crore

Start with calculating your target corpus. Don’t use a nice big number like Rs 1 crore to take care of your retirement or child’s study abroad. Work with real numbers (current cost of living or college fee), provide for annual inflation (be careful about lifestyle inflation and education inflation) and taxes to calculate your target corpus. Read: Will Rs 1 crore be enough to take care of all your needs after 15 years?

Your DIY SIP calculator can help you find two things you are looking for: one, how much should you invest monthly to reach your target corpus. Two, how much will you be able to accumulate with your regular investment of a specific sum.

We will start with the first calculation. Open MS Excel. Next, look for 'Insert fx' sign under the 'FORMULAS' tab in the menu bar. If you take your cursor to the `fx’ sign, it will show `Insert Function.’ Click on it, and box will open with various functions. Select `PMT’ function. Click on it, and another box with various columns will open. Key in the required numbers.

Rate: assumed rate of interest. Example, 12%. Divide it by 12 since you are investing every month.

Nper: Number of months. Example: 10 year; multiply it by 12 to make it months

PV: ignore this column if you are starting afresh and do not have any savings or investments for the goal at present

FV: key in your target corpus number

Type: key in '1' or '0' depending on if you are investing in the beginning or at the end of the period

There you go, you have the monthly investment required to be made. (Check the above image)

Let us move to the next calculation: how much will you make with your regular monthly investments. Once again, go to 'fx' sign, click on it and choose `FV’ function from the list of functions.

Key in required number in Rate (same numbers as above), Nper (key in the number of years, multiply it by 12 to make it monthly), Pmt (key your SIP amount), PV(if you have any existing investments and you want the calculator to factor in that towards your goal) , and enter '0' or '1' in `Type’ column. There you are, the result is your corpus at the end of your investments. (Check the above image)