How can people build ₹5-6 crore corpus for retirement if they begin investing at 40
As the age-old adage goes, “it’s never too late to start.” This phrase holds particularly true when it comes to planning for retirement. Many individuals assume that they are too old to begin saving for their golden years, especially if they are already in their 40s. However, with a solid plan and consistent investing, it is entirely possible to build a substantial retirement corpus, even if you start at the age of 40.
In a recent report, NDTV Profit highlighted the importance of starting early, but also provided a roadmap for those who are beginning their retirement planning journey at 40. According to the report, considering the retirement age to be 60, a person aged 40 should invest ₹55,000 in a monthly SIP (Systematic Investment Plan) for 20 years at a 12% expected rate of return to build a retirement corpus of ₹5 crore. Similarly, to build a retirement corpus of ₹6 crore, a person would need to invest ₹65,000 monthly in SIP at 12% return.
These numbers may seem daunting, but they are achievable with discipline and patience. The key is to start early, even if it’s at 40, and to be consistent in your investments. A well-planned investment strategy can help you build a substantial corpus over time, ensuring that you have a comfortable retirement.
Understanding the Power of Compounding
One of the most significant advantages of starting to invest early, even at 40, is the power of compounding. Compounding refers to the process of earning returns on your returns, which can lead to exponential growth over time. The earlier you start investing, the more time your money has to grow, and the more significant the impact of compounding will be.
For example, if you invest ₹55,000 per month for 20 years at a 12% rate of return, your total investment would be approximately ₹13.2 lakhs (₹55,000 x 12 x 20). However, due to the power of compounding, your corpus would grow to a staggering ₹5 crore. This is a testament to the power of consistent investing and the importance of starting early.
Creating a Retirement Plan
So, how can you create a retirement plan that helps you build a ₹5-6 crore corpus? Here are a few steps to get you started:
- Determine your retirement goals: Start by determining how much you need to save for your retirement. Consider factors such as your expected expenses, lifestyle, and any sources of income you may have during retirement.
- Choose your investments: Next, choose your investments wisely. Consider a mix of low-risk and high-risk investments, such as fixed deposits, mutual funds, and stocks.
- Start a SIP: Begin a SIP to invest a fixed amount of money at regular intervals. This will help you invest consistently and take advantage of the power of compounding.
- Monitor and adjust: Finally, monitor your investments regularly and adjust your plan as needed. This will help you stay on track and ensure that you are on course to meet your retirement goals.
Benefits of Starting Early
Starting to invest at 40 may seem late, but it has its benefits. For one, you are likely to have a higher income at this stage of your life, which means you can invest more. Additionally, you may have already paid off some of your debts, such as your mortgage, which means you have more money to invest.
Moreover, starting to invest at 40 gives you a clear idea of your financial goals and priorities. You are likely to have a better understanding of your expenses, income, and financial obligations, which makes it easier to create a solid retirement plan.
Conclusion
Building a ₹5-6 crore corpus for retirement may seem like a daunting task, but it is achievable with discipline, patience, and a solid plan. Starting to invest at 40 may seem late, but it’s never too late to start. By creating a well-planned investment strategy, taking advantage of the power of compounding, and starting a SIP, you can build a substantial corpus over time.
Remember, retirement planning is a long-term game, and it’s essential to be consistent and patient. With the right plan and a bit of discipline, you can ensure a comfortable retirement and achieve your financial goals.
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