Want to retire with Rs 3.7 cr corpus? Understand with calculations how you can achieve it with Rs 20,000 monthly SIP investment
Retirement Planning: Whether you are a salaried employee, a small business owner, or an individual, it is important to think and plan for your post-retirement life as early as possible. Doing so will help you achieve financial freedom and a stress-free life. The earlier you plan for your retirement, the larger the corpus you can accumulate.
(Disclaimer: This is not investment advice. Calculations are projections. Please do your own due diligence or consult an advisor for retirement planning.)
Retirement Planning: An Easy Solution
But the question is, how can you plan for your retirement? Well, the simple and effective solution to this is SIP (Systematic Investment Plan) in mutual funds. SIP offers significant benefits, primarily due to the power of compounding. And one of the key points is the longer the SIP duration, the greater the compounding benefits.
The Earlier You Start, The More Time You Have
If you start planning for your retirement at the age of 25, you will have around 35 years to invest in SIP and accumulate funds. However, even if you have crossed your 30s, you can still accumulate a substantial corpus of around Rs 3.7 crore. Here’s how you can retire in just 25 years by investing Rs 20,000 a month.
How to Plan for Retiring in the Next 25 Years?
With disciplined and regular investment, you can achieve your retirement goals (after crossing the age of 60) with a substantial corpus, even if you’ve already crossed your 30s. Here’s how much you should invest each month to make this dream a reality.
Retire in the Next 25 Years
To retire in 25 years, you need to estimate the duration of your retirement and the corpus required. For example, if you're 35 and want to retire at 60 with a corpus of Rs 3.7 crore, you’ll need to invest around Rs 20,000 per month for 25 years.
Build a Rs 3.7 Crore Retirement Corpus: Total Money You Need to Invest in 25 Years
According to the SIP calculator, you will invest a total of Rs 60,00,000 over 25 years.
Build a Rs 3.7 Crore Retirement Corpus: Estimated Capital Gain at 12% Annualized Return
Based on an average annualised return of 12 per cent, the estimated capital gain will be Rs 3,19,52,702.
Build a Rs 3.7 Crore Retirement Corpus: Total Amount Received
Consequently, at the end of 25 years, including the principal investment and capital gain, you will receive a total of Rs 3,79,52,702.
Calculation: You Become the Owner of Rs 3.7 Crore at the Time of Your Retirement
Total Investment Amount: Rs 60,00,000
Estimated Capital Gains: Rs 3,19,52,702
Total Approximate Return: Rs 3,79,52,702
SIP Investment: Things to Remember
It’s important to know that SIP is a market-linked scheme, so returns are not guaranteed. The 12 percent return mentioned above is an estimate, and actual returns may vary depending on market conditions.
Benefits of SIP
Despite the market risks, SIP is often considered a good option for wealth creation because it benefits from rupee cost averaging, which helps mitigate losses. However, keep in mind the inherent risks of investing in SIP and plan accordingly.