Benefits of Compounding: Starting with Rs 7,500 step up SIP at 25, 30, and 35 years, how much fund can you generate at retirement
Retirement Planning: When you talk about retirement planning, you need to focus on 3 factors- how much lump sum amount you need at retirement and how much monthly income you need after that, and the third factor is the inflation rate. You need to calculate the inflation-adjusted retirement corpus and need to assess your monthly investment to achieve that target. If the amount is quite large compared to your current income, you have two solutions: you need to start investing early to get compound growth advantage on your investments, and you need to increase the investment amount yearly. In this write-up, know how compounding works in investing, and how much retirement corpus can be generated with a 5% annual step up SIP starting with a Rs 7,500 monthly investment at ages 25, 30, and 35 years.
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Compound benefits in retirement planning
The earlier one starts, the higher retirement corpus they can generate, even if their monthly investment is not very high. If one invests Rs 5,000 monthly for 35 years and get 12 per cent annualised growth on that, their investment will be Rs 21,00,000, and the estimated corpus will be Rs 2,75,54,156.
Compound benefits in retirement planning
But if the same person starts 10 years late and instead of Rs 5,000 invests Rs 15,000 a month, their investment will be Rs 45,00,000, but the estimated corpus will be Rs 2,55,33,099.
Calculation conditions
We will start with a Rs 7,500 monthly SIP, step up it by 5% annually, and expect a 12 per cent annualised return on it. Starting investment ages will be 25, 30, and 35 years, and the investor will invest till 60 years of age.
What will be the investment with Rs 7,500/m step up SIP starting at 25?
The invested amount in 35 years will be Rs 81,28,828.
What will be retirement corpus starting investment at 25?
The estimated gains will be Rs 6,66,43,246, and the estimated corpus will be Rs 7,47,72,073.
What will be the investment with Rs 7,500/m step up SIP starting at 30?
The invested amount in 30 years will be Rs 59,79,496.
What will be retirement corpus starting investment at 30?
The estimated gains will be Rs 3,35,71,048, and the estimated corpus will be Rs 3,95,50,545.
What will be the investment with Rs 7,500/m step up SIP starting at 35?
The invested amount in 25 years will be Rs 42,95,439.
What will be retirement corpus starting investment at 35?
The estimated gains will be Rs 1,62,15,457, and the estimated corpus will be Rs 2,05,10,896.
Disclaimer
Our calculations are projections and are not investment advice. Please do your own due diligence or consult an advisor for financial planning.