70:15:15 Investment Strategy: Can you build over Rs 2.93 crore retirement corpus with just Rs 30,000 salary? Know how
SIP Investment: Are you a salaried employee, and with your modest salary, do you feel that high inflation prevents you from saving for your retirement because your entire income goes toward essential expenses? If yes, then you are mistaken. This is because, with a disciplined and strategic plan, anyone can save and invest for the future. 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 that is manageable within your income. Therefore, setting aside a portion for savings and investments is always crucial.
Investment options
If you want to invest a portion of your salary for your retirement, there are numerous investment options available that can help you build substantial capital, even with a small amount of money.
Confused about where to invest?
One of the most popular and effective options is the mutual fund SIP (Systematic Investment Plan). By consistently investing a portion of your salary into a SIP, you can become a crorepati over time.
70:15:15 SIP Investment Strategy: If your income is Rs 30,000 per month
If you're earning Rs 30,000 per month, it's important to save some of that amount. If you want to save money for your future and need helpful guidelines, the 70:15:15 rule can be beneficial.
70:15:15 SIP Investment: Decoding the formula
According to the 70:15:15 SIP Investment formula, you must allocate 70 per cent of your salary for daily living expenses. 15 per cent should be set aside for an emergency fund, and the remaining 15 per cent should be invested in a SIP each month.
70:15:15 SIP Investment: How does the formula work?
Suppose you earn Rs 30,000 per month. Here’s how the formula works:
- 70% for Living Expenses: This amounts to Rs 21,000, which should be used to cover all your essential expenses.
- 15% for Emergency Fund: Set aside Rs 4,500 each month to build an emergency fund, ensuring you don’t have to dip into your investments during tough times.
- 15% for SIP Investments: Invest the remaining Rs 4,500 in a SIP each month.
70:15:15 Formula: Your total investment
If you invest Rs 4,500 every month for 35 years, you will contribute a total of Rs 18,90,000.
70:15:15 Formula: Estimated Capital Gain at 12% Annualized Return
Based on an average annualized return of 12 per cent, the estimated capital gain can be around Rs 2,73,38,711 over 35 years.
70:15:15 Formula: Calculating the total amount received
With a 12 per cent return, your investment could grow to approximately Rs 2,92,28,711 in 35 years, which includes both the estimated capital gain and the amount invested.
SIP Investment: Things to Remember
It’s important to know that SIP is a market-linked scheme, so returns are not guaranteed. The 12 per cent return mentioned above is an estimate, and actual returns may vary depending on market conditions.
70:15:15 Formula: Calculating total investment if the return is 14%
For example, if your investments yield a 14 per cent return, your total could rise to Rs 5,05,46,187 after 35 years.
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.