How much SIP should be done for a salary of ₹40,000 to ₹50,000? Know the 50-30-20 formula and the exact roadmap to become a millionaire

This question often arises in the minds of employed youth and middle class salaried people that after meeting the monthly essential needs and lifestyle expenses, how much amount should be saved and invested for the future. According to Chartered Accountants (CAs) and Certified Financial Planners, in wealth creation it is not how big your salary is, but what percentage of your income you invest every month in a disciplined manner. If your take-home salary is in the range of ₹40,000 to ₹50,000, a balanced mutual fund SIP (Systematic Investment Plan) started at the right time can bring you financial freedom in the coming 15 to 20 years.

The most popular and scientific rule of financial planning is the ’50-30-20′ budgeting model. Under this, your in-hand salary is divided into three essential parts:

1. 50% Essential Needs: This includes house rent or home loan EMI, ration, children’s fees, electricity-water bills and medical expenses.

2. 30% Personal Wants: Weekend outings, gadgets, shopping, cinema and holiday travel expenses.

3. 20% Future Savings/Investments: This portion should be reserved for emergency funds and long-term mutual fund SIPs.

Minimum and aggressive SIP targets based on salary slab

If you don’t have any major EMIs or family liabilities, CAs recommend reducing the ‘wants’ budget from 30% to 20% and taking your SIPs to 30%.

Mutual fund equity schemes have historically seen an average CAGR return of 12% over the long term. If you continue SIP of ₹10,000 per month out of a salary of ₹50,000, the corpus created through the power of compounding will be as follows:

Disciplined savings of just ₹10,000 per month creates a corpus of around ₹1 crore in 20 years, with the original investment being only ₹24 lakh and the wealth gain accrued being more than ₹75 lakh.

Instead of investing the entire SIP amount in one fund, it is wise to divide it based on risk and growth:

• Large Cap or Nifty 50 Index Fund (40% – ₹4,000): Invest in top 50 blue chip companies of the country to provide stability to the portfolio.

• Flexi Cap or Multi Cap Fund (30% – ₹3,000): The fund manager has the freedom to switch between large, mid and small caps as per market conditions.

• Mid Cap Fund (20% – ₹2,000): To boost average returns through medium-sized, fast-growing companies.

• Small Cap Fund (10% – ₹1,000): To generate exceptional alpha at high risk and over the long term.

As the career progresses, there is also an annual increment in the salary. The most important advice of CA is to increase your SIP amount at least every year. 10% increase (Step-up) Do it.

• For example, ₹10,000 per month in the first year, ₹11,000 in the second year and ₹12,100 in the third year.

• Same initial SIP of ₹10,000 with 10% annual step-up instead of ₹1 crore straight away in 20 years More than ₹1.85 crore Can create a corpus of.

1. Emergency Fund: Along with starting a SIP, keep at least 6 months of your mandatory expenses (about ₹1.5 to ₹2 lakh) in liquid funds or fixed deposits so that you do not have to sell the mutual fund in an emergency.

2. Term Insurance: To protect your family, take a pure term life cover of at least 15 to 20 times your annual income.

3. Health Insurance: Apart from your company cover, take a personal family floater health cover of at least ₹10 lakh so that hospital bills do not touch your investment capital.