70:15:15 Investment Strategy: Can you build over Rs 1.5 crore retirement corpus with just Rs 20,000 salary? Know how
70:15:15 Investment Strategy: Many individuals with modest salaries often feel that high inflation prevents them from saving; they believe their entire income goes toward essential expenses. However, there's a saying: "Stretch your legs only as far as your blanket allows." This means you should only increase your expenses to a level manageable within your income. If you base your spending on others, you may jeopardize your future.
Habits of saving and investing
To truly secure your financial future, it's essential to cultivate the habits of saving and investing. Regardless of your income level, setting aside a portion for savings and investments is crucial.
Numerous investment options available
Fortunately, there are numerous investment options available that can help you build substantial capital, even with a small amount of money.
Systematic Investment Plan (SIP)
One of the most effective options is the Systematic Investment Plan (SIP). If you consistently invest a portion of your salary into a SIP, you can become a millionaire over time.
70:15:15 SIP Investment Strategy: If income is Rs 20,000 per month
If you're earning Rs 20,000 per month, it's important to save some of that amount. A helpful guideline is the 70:15:15 rule.
70:15:15 SIP Investment: How does the formula work?
Here's how it works:
- 70% for Living Expenses: This amounts to Rs 14,000, which you should use to cover all your essential expenses.
- 15% for Emergency Fund: Set aside Rs 3,000 each month to build an emergency fund, ensuring that you don’t have to dip into your investments during tough times.
- 15% for SIP Investments: Invest the remaining Rs 3,000 in a SIP each month.
70:15:15 Formula: How you can become a crorepati?
Investing in mutual funds through SIPs can yield impressive returns. The average return on mutual funds is around 12 per cent, and they offer the benefit of compounding, which can significantly accelerate your wealth accumulation.
70:15:15 Formula: Your total investment
If you invest Rs 3,000 every month for 30 years, you will contribute a total of Rs 10,80,000.
70:15:15 Formula: Calculating total investment if return is 12%
With a 12 per cent return, your investment could grow to approximately Rs 1,05,89,741, which includes about Rs 95,09,741 in long-term capital gain alone.
70:15:15 Formula: Calculating total investment if return is 14%
Since SIPs are linked to market performance, there’s potential for even higher returns. For example, if your investments yield a 14 per cent return, your total could rise to Rs 1,66,71,167 after 30 years.