Retirement Planning: How many years it may take to reach from 0 to Rs 5 crore retirement corpus

SIP Calculator: Systematic investment plan (SIP) is a more popular investment method than a lump sum in mutual funds. Association of Mutual Funds in India (AMFI) data released every month has been proving it time and again. Investors can pick mutual fund types such as equity, hybrid, or debt as per their requirements and financial goals. Some of the important factors that should be on our minds while investing in mutual funds are: are returns beating the benchmark returns? Are they beating inflation? Are they benefiting us post capital gain tax? Will I be in deficit if I withdraw them in case of an emergency?

When we talk about long-term financial planning, such as retirement, we may prefer equity funds as they provide compounding and, in the long run, can beat market fluctuations.

The mantra for building a large retirement corpus is to start investing early.

So, if you are thinking of building a large corpus, such as Rs 5 crore or over, you can start at 25 years of age. If you make a Rs 10,000 monthly SIP and get returns that are lower even than Nifty 50's over 14 per cent return in the 20-year period, your small contribution may do wonders in the long run.

In this write-up, we will tell you how soon you can build up to a Rs 5 crore retirement corpus with a Rs 10,000 monthly SIP and 12 per annual SIP returns (XIRR), assuming you are starting your retirement journey at 25 years of age.

Rs 1 crore retirement corpus milestone

If you run a Rs 10,000 SIP for 20 years and get a 12 per cent return on that, your contributions in 20 years will be Rs 24,00,000 (Rs 24 lakh), long-term capital gains will be Rs 75,91,479, and the expected amount will be Rs 9991479.

In 20 years, your capital gains will be more than three times your principal amount.

It becomes possible because of compounding growth on your SIP investments.

Compounding helps grow your money faster after 20 years. Also, at 45 years of age, you will have Rs 1 crore.

Rs 2 crore retirement corpus milestone       

You reached the Rs 1 crore milestone in 20 years, but at 12 per cent annual growth, you can reach the Rs 2 crore landmark in just six years.

After 26 years, your invested amount will be Rs 31,20,000, long-term capital gains will be Rs 1,83,91,120, and the expected amount will be Rs 2,15,11,120.

At 51 years of age, you will have over Rs 2.15 crore.

Rs 3 crore retirement corpus milestone

It took you six years to reach from Rs 1 crore to Rs 2 crore, but it will take just three years to reach the Rs 3 crore mark.

After 29 years, your contributions will be Rs 34,80,000, long-term capital gains will be Rs 2,77,32,516, and the expected amount will be Rs 3,12,12,516.

At 54 years of age, you will have over Rs 3.12 crore of corpus. 

Rs 4 crore retirement corpus milestone

In just the next two years, you will achieve the milestone of a Rs 4 crore retirement corpus.

After 31 years, your invested amount will be Rs 37,20,000, long-term gains will be Rs 3,61,84,045, and long-term capital gains will be Rs 3,99,04,045.

At 56, your retirement corpus will be nearly Rs 4 crore.

Rs 5 crore retirement corpus milestone

In the next two years, you will cross the barrier of a Rs 5 crore retirement corpus.

After 33 years, your SIP investment will be Rs 39,60,000, long-term capital gains will be Rs 46979981, and the expected return will be Rs 5,09,39,981.

At 58 years of age, you will have a Rs 5.10 crore retirement corpus.

What if you continue investing and retire at 60

By adding just two years to your SIP investment, you can generate a retirement corpus of Rs 6.50 crore.

Your contributions will be Rs 42,00,000, long-term capital gains will be Rs 6,07,52,691, and the expected amount will be Rs 6,49,52,691.

(Disclaimer: This calculation is only for knowledge purpose. Do you do your own due diligence or consult an expert for your retirement planning).