I want Rs 35 lakh for my daughter’s wedding after 10 years. How much should I invest via mutual fund SIPs?

I have decided to invest part of my savings in mutual fund SIPs to prepare for my only daughter’s wedding. I am a single mother, and my daughter is now 13 years old. And I would need around Rs. 35 lakh in 10 years from now for her marriage. Please guide me on how much I should invest monthly in mutual fund SIPs so that I have sufficient funds for my daughter’s marriage. My current take-home income is Rs 1 lakh per month.  

Madhuri Lal 

Reply by Rajiv Bajaj, Chairman and MD, BajajCapital  

We congratulate you for your financial understanding and proactive approach to planning for your daughter’s wedding. It is essential to acknowledge the inevitable impact of inflation on the expenses associated with this significant event over the next decade. We trust you have taken this into account in your preparations. 

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If you believe that Rs 35 lakh will suffice for your daughter’s wedding ten years from now, initiating a monthly savings plan of Rs 15,000 through Mutual Fund SIPs is advisable. With an anticipated annual return of 12%, you stand a good chance of amassing the desired sum of Rs 35 lakh in the specified time frame. However, if you have not factored in the projected rate of inflation, the required amount could rise to Rs 63 lakh, assuming an annual inflation rate of 6%. In such a scenario, you would need to contribute Rs 27,000 per month to your Mutual Fund SIPs for the next ten financial years. 

Since the time horizon is 10 years, you can take exposure in the equity mutual funds scheme. To diversify more, invest in a basket of two to three funds, including balanced advantage funds and mid-cap funds. 

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It’s important to note that these calculations are founded on certain assumptions, such as anticipated inflation and expected equity market returns. To err on the side of caution, we recommend considering a monthly savings commitment of Rs 30,000, roughly 30% of your current take-home salary. This approach ensures a more secure path to achieving your future financial objectives. 

(Views expressed by the investment expert are his/her own. E-mail us your investment queries at askmoneytoday@intoday.com. We will get your queries answered by our panel of experts.) 

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