Retirement Planning: Monthly savings Rs 8,000; in how many years, can you achieve Rs 4 crore corpus goal?
There is nothing wrong with planning a retirement as soon as you start earning. Starting early can help you build a large corpus by the time you retire.
Having a retirement corpus provides a sense of financial security during the post-employment years. By planning a retirement, individuals can reduce the risk of becoming dependent on others for financial support. Starting early is the key strategy that might help you reach your goal of building a satisfactory retirement corpus. Here, we will discuss how a monthly savings of Rs 8,000 can help an individual build Rs 4 crore 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 is an inevitable phase of life and it is important to prepare and plan for it early to avoid financial dependence on others. It is a process in which an individual prepares for a good life after they are done working for a full-time job.
Why is retirement planning important?
Planning a retirement is important to maintain a standard of living and to avoid depending on others for financial support. Nobody can predict what is going to happen tomorrow. In such situations, it is best to stay ahead of time, and a retirement plan allows you to do exactly that.
Retirement planning through mutual fund SIP
Investors can plan a retirement by investing in a systematic investment plan (SIP) which will let them build wealth over time. They can invest a fixed amount at regular intervals such as daily, weekly, monthly, half-yearly, or yearly. Investors can also adjust their investment amounts based on their finances.
Mutual fund SIP calculation conditions
We will take the 20 per cent of monthly income as an investment amount. So, for Rs 40,000 monthly salary, the monthly SIP investment will be Rs 8,000. We are expecting 12 per cent annualised return on the SIP investment. Check the calculations below.
How much will be the retirement corpus in 10 years?
In 10 years, the investment amount through the monthly SIP will be Rs 9,60,000, the estimated capital gains will be Rs 8,98,713, and the estimated retirement corpus will be Rs 18,58,713.
How much will be retirement corpus in 20 years?
The invested amount during this period will be Rs 19,20,000, estimated capital gains will be Rs 60,73,183, and the estimated retirement corpus will be Rs 79,93,183.
How much will be retirement corpus in 33 years?
The magic of compounding will be more clear in 33 years as the invested amount will be Rs 31,68,000, estimated capital gains will be Rs 3,75,83,985, and the estimated retirement corpus will be Rs 4,07,51,985.
How much will you earn in 33 years with Rs 8,000 monthly SIP?
Expected Return Rate: 12 per cent
Total Invested Amount: Rs 31,68,000
Estimated capital gains: Rs 3,75,83,985
Estimated retirement corpus after 33 Years: Rs 4,07,51,985