Are there any tips or equations to estimate SIP returns in the long term?

POSTED BY anon smith ON July 22, 2012 9:22 pm ONE COMMENT

After reading a lot online, I’m worried that pure FD most probably will not help achieve all financial goals due to inflation, etc and of course, that this portfolio can be considered ‘horrible’ by most investors since there’s no risk at all!

Can a SIP help? Is there a way to estimate a return? say if I want to spend fY ( 0 < f < 1) every year on SIP for 15 years, how can I estimate the minimum value of f to achieve a return pY after n years (n is about 15) if possible?

Here's a following investment plan if I trust only FDs:
(i.e assuming there's an FD at 9% which gives a 6.3% return after 30% TDS every year)

year 1: I invest fY for 15 years, returns fy*(1.063)^14
year 2: invest fY for 14 years, returns fy*(1.063)^13 and so on.

In the end, it's 23.81fY after 15 years (from investing 15fy total)…or a 58.73% return.

1) is making such an FD investment possible? foolish? allowed? am I overlooking any extra holes?

2) I've read here (https://www.jagoinvestor.com/2009/01/how-to-decide-your-equitydebt.html) equity is almost no risk for a long term…I am looking at MFs/SIP. Is a much much higher return after 15 years expected than the above 58.73% benchmark for MFs/SIP? philosophically speaking, even though it is 'almost not' risky in the long term, the risk is still non zero compared to the zero risk of FDs so it's only justified to get higher returns. (Inflation is playing an equal role in both cases I believe since we are looking at absolute return after 15 years)

One reply on this article “Are there any tips or equations to estimate SIP returns in the long term?”

  1. anon smith says:

    sorry for the repeat question. I think it’s already answered here: http://localhost/jagoforum2/calculating-and-understanding-mutual-fundsip-return-and-comparing-to-bank-rd/1840/ (related questions!). Feel free to add more inputs if needed.

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