SIP Investment: Salary Rs 25K, retirement target Rs 1.76 crore; know why it is easy task

SIP Investment: What are our excuses for not saving money at the beginning of our career? My salary is low; how will I save?; even if I manage to save 2-3 thousand a month, what difference will it make in the long term?; I don't have liabilities, so I don't need to save much.

Savings are for future planning, or more specifically, for financial independence, achieving your financial goals, and living life happily when your sources of income deplete.

No saving is small if you are disciplined and consistent and do it in the long term.

Even with a salary of Rs 25,000, you can start saving money and achieve big financial goals.

Your corpus at the time of retirement (60 years of age or even early) can reach as high as Rs 1.76 crore or beyond that.

And even that corpus may look like an easy target if you increase your investment annually with a jump in your salary.

How much money should be saved from salary?

To become a crorepati, it is most important that you first develop the habit of saving.

The financial rule says that you should save at least 20 per cent of your income.

In such a situation, if your monthly salary is Rs 25,000, you must save Rs 5000 a month.

Since savings are not invested, they always get spent, whereas investment increases your wealth.

Therefore, invest your savings at all costs.

How will retirement corpus worth crores be built?

If you want to accumulate wealth worth crores from your savings, then investing in mutual funds through SIP can be a good option.

In the last few years, SIP investment has given an average return of 12 per cent.

In such a situation, if you start a long-term SIP, the accumulation of a huge fund will not be a big deal.

Suppose you invest Rs 5,000 every month in SIP and continue it for 30 years, in 30 years, you will invest a total of Rs 18 lakh and you will get Rs 1.58 crore as capital gains.

In this way, after 30 years, you will get a total of Rs 1.76 crore and you will become a crorepati with a small investment.

If you keep increasing this investment from time to time as your income increases, then you can fulfil your dream of becoming a crorepati much before 30 years.

What if you increase your investment by 10% every year

As a beginner, if your salary is Rs 25,000, it is bound to increase if you work hard and smartly.

The financial rule says you should increase your investment by 10 per cent a year with an increase in your salary.

It is possible if your salary rises by 10 per cent on average every year.

Suppose your investment through SIP is Rs 5,000 a month in the first year, and you increase it by 10 per cent every year, we will tell you how much you will accumulate in 20, 25, and 30 years.

In 20 years, your investment will be Rs 34.36 lakh, capital gains will be Rs 65.07 lakh, and the total value of your investment will be Rs 99.44 lakh.

In 25 years, you will invest Rs 59 lakh, your capital gains will swell to Rs 1.55 crore, and the total value will be Rs 2.14 crore.

If you extend your investment for another five years, i.e. a total of 30 years, you will invest Rs 98.70 lakh, your capital gains will be Rs 3.43 crore, and the total investment value will be Rs 4.42 crore.