70:15:15 Investment Strategy: Monthly salary Rs 25,000? How to aim for Rs 1.3 crore retirement corpus
70:15:15 Investment Strategy: Do you often feel like you can’t save or invest because most of your income goes toward essential expenses? If so then the 70:15:15 Investment Strategy might be helpful for you. This strategy helps you cover your essential expenses, set aside money for emergencies, and still invest in a Systematic Investment Plan (SIP) mutual fund. Here’s how it works:
(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)
70:15:15 SIP Investment Strategy – Example for an income of Rs 25,000 per month
If you earn Rs 25,000 per month and want to save for the future, the 70:15:15 rule can be an effective solution.
What is the 70:15:15 SIP investment formula?
The 70:15:15 formula divides your monthly income into three parts:
- 70% for essential living expenses
- 15% for an emergency fund
- 15% for SIP investments
How the 70:15:15 SIP investment formula works with a monthly salary of Rs 25,000
- 70% for Living Expenses: This equals Rs 17,500, which should be used to cover all essential expenses.
- 15% for Emergency Fund: Set aside Rs 3,750 each month to build an emergency fund, ensuring you have a safety net in tough times.
- 15% for SIP Investments: Invest the remaining Rs 3,750 each month in a SIP.
Projecting future returns with the 70:15:15 formula
Assuming an average return of 12 per cent on SIP investments, let’s see how much you can accumulate over time.
Total investment over 30 years
If you invest Rs 3,750 each month for 30 years, you will contribute a total of Rs 13,50,000.
Calculating capital gain if return is 12%
With a 12 per cent return, you can accumulate Rs 1,18,87,177 as capital gain.
70:15:15 Formula: Total amount received
Your investment could grow to approximately Rs 1,32,37,177 after 30 years.
70:15:15 Formula: Calculating total investment if return is 13%
Since SIPs are linked to market performance, there’s potential for even higher returns. For example, if your investments yield a 13 per cent return, your total could rise to Rs 1,65,77,426 after 30 years.
70:15:15 Formula: Calculating total investment if return is 14%
Another example, is if your investments yield a 15 per cent return, your total could rise to Rs 2,08,38,959 after 30 years.
70:15:15 Formula: Calculating total investment if return is 15%
If your investments yield a 15 per cent return, your total could rise to Rs 2,62,86,827 after 30 years.