20-year delay in investment may cost you Rs 63.60 lakh to achieve Rs 1.50 crore corpus; know how it may derail your retirement planning
If you invest Rs 5,000 a month in a scheme, where you get 12 per cent annualised growth for 15 years, your investment will be Rs 9,00,000, and the expected amount will be Rs 23,79,657. But if you invest Rs 15,000 a month 6 year and get 12 per cent annualised return on it, your investments will be Rs 10,80,000, but the expected amount will be Rs 15,54,038. Thus, Rs 1,80,000 less investment can help you get Rs 8,25,619 more because of staying 10 years extra in your investment.
We often hear that early investment can help you form a large corpus with small amount. In investing, specially investment avenues, where you get compound interest or compound growth, time plays a key role. Your monthly investment can be small, but if you stick to them for a long time, they can help you build a much larger corpus compared to higher-amount investment in the short time frame.
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Retirement corpus calculation example
E.g., if you invest Rs 5,000 a month in a scheme, where you get 12 per cent annualised growth for 15 years, your investment will be Rs 9,00,000, and the expected amount will be Rs 23,79,657. But if you invest Rs 15,000 a month 6 year and get 12 per cent annualised return on it, your investments will be Rs 10,80,000, but the expected amount will be Rs 15,54,038.
Retirement corpus calculation example
Thus, Rs 1,80,000 less investment can help you get Rs 8,25,619 more because of staying 10 years extra in your investment. In this write-up, we will show you how you need to invest Rs 63.60 lakh more get the same retirement corpus if you delay your investments for 20 years.
What will be your monthly investment
We will show you 3 calculations, where in first case, we will invest Rs 5,000 for 30 years, in the second case, we will invest Rs 16,500 for 20 years, and in the third case, we will invest Rs 58,000 monthly for 10 years.
What will be growth rate?
In each case, we are expecting annualised growth rate of 12 per cent.
Retirement corpus with Rs 5,000/month investment
If we invest Rs 5,000 monthly for 30 years and get 12 per cent annualised growth on it, the total investment in 30 years, will be Rs 18,00,000, estimated long term capital gains will be Rs 1,36,04,866, and the expected amount will be Rs 1,54,04,866.
Retirement corpus with Rs 16,500/month investment
If we invest Rs 16,000 a month for 20 years and get 12 per cent annualised growth on our investment, the total investment in that duration will be Rs 39,60,000, estimated long term capital gains will be Rs 1,12,17,646, and the expected amount will be Rs 1,51,77,646.
How much you will invest extra
It means you will spend estimated Rs 21,60,000, and still your retirement corpus will be short by 2,27,220 compared to investment of Rs 5,000 a month.
Retirement corpus with Rs 58,000/month investment
If we invest Rs 58,000 monthly for a 10-year period and get 12 per cent annualised growth on it, the total investment in that duration will be Rs 81,60,000, estimated long term capital gains will be Rs 70,74,440, and the expected amount will be Rs 1,52,34,440.
How much you will invest extra
It means you will spend estimated Rs 63,60,000 more, and still your retirement corpus will be short by 1,70,426 compared to investment of Rs 5,000 a month.
How much you will invest extra
In comparison to Rs 16,500 monthly investment for 20 years, you will spend Rs 42,00,000 more for just Rs 56,794 extra income.
Disclaimer
This is not investment advice. Do your own due diligence or consult an expert for retirement planning