Retirement Planning: Monthly savings Rs 10,000; in how many years can you achieve Rs 8 crore corpus goal?
Planning for retirement at an early stage can help you build a large corpus post retirement. Saving and investment can go hand in hand. If you have a steady income and you can save Rs 10,000 monthly, you have the opportunity to build a large retirement corpus through a systematic investment plan (SIP) in a mutual fund. Let’s understand how.
Retirement planning at an early stage can help an individual prepare for a good life post retirement. It provides a sense of financial security during your retirement days. Therefore, one must plan for it at an early stage as starting early would help gather a large corpus compared to when one starts late. Here, we will understand how a monthly savings of Rs 10,000 can help build Rs 8 crore retirement corpus.
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(Disclaimer: Our calculations are projections and not investment advice. Do your own due diligence or consult an expert for financial planning)
What is retirement planning?
Retirement planning is a preparation to ensure financial stability and security post retirement. It helps an individual live independently and maintain a similar standard of living after retirement.
Benefits of retirement planning
Financial security
Regular income
Emergency fund
When should you start retirement planning?
The ideal time to start planning for retirement is as early as possible. Starting early gives you the advantage of more compounding compared to when you begin your investment journey late. However, if you have not started early, it is never too late to begin.
Retirement planning through monthly SIP
A systematic investment plan (SIP) in a mutual fund scheme(s) enables investors to build wealth over time by investing a fixed amount at regular intervals such as daily, weekly, monthly, half-yearly, or yearly. They can adjust their investment amounts based on their income. They can also stop or restart their SIP if they so choose, or they can increase their amount.
Mutual fund SIP calculation conditions
We will take the 20 per cent of monthly income as an investment amount. So, for an investor with Rs 50,000 monthly salary, the monthly SIP investment will be Rs 10,000. We are expecting 12 per cent annualised return on the SIP investment.
How much will you earn in 37 years with Rs 10,000 monthly SIP?
Expected Return Rate: 12 per cent
Total Invested Amount: Rs 44,40,000
Estimated capital gains: Rs 7,83,05,114
Estimated retirement corpus after 37 Years: Rs 8,27,45,114
Retirement corpus
For someone who is earning Rs 50,000 a month and is starting a mutual fund SIP investment at 25 years of age with Rs 10,000 monthly SIP investment, they can create an estimated retirement corpus of Rs 8 crore by 62.
How much will be the retirement corpus in 10 years?
In 10 years, the investment amount through the monthly SIP will be Rs 12,00,000, the estimated capital gains will be Rs 11,23,391, and the estimated retirement corpus will be Rs 23,23,391.
How much will be retirement corpus in 20 years?
The invested amount during this period will be Rs 24,00,000, estimated capital gains will be Rs 75,91,479, and the estimated retirement corpus will be Rs 99,91,479.
How much will be retirement corpus in 37 years?
The magic of compounding will be more clear in 37 years as the invested amount will be Rs 44,40,000, estimated capital gains will be Rs 7,83,05,114, and the estimated retirement corpus will be Rs 8,27,45,114.