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 is particularly true when it comes to planning for retirement. While it’s ideal to start saving and investing for retirement from an early age, it’s not impossible to build a substantial corpus even if you begin investing at 40. In this blog post, we’ll explore how individuals can accumulate a retirement corpus of ₹5-6 crore if they start investing at the age of 40.
First and foremost, it’s essential to understand the importance of starting early, but also to recognize that it’s not the only factor that determines the size of your retirement corpus. Consistency, discipline, and a well-thought-out investment strategy are equally crucial. Assuming a retirement age of 60, an individual has 20 years to build a substantial corpus. While this may seem like a daunting task, it’s achievable with a clear plan and a bit of financial discipline.
According to a report by NDTV Profit, to build a retirement corpus of ₹5 crore, an individual aged 40 would need to invest approximately ₹55,000 in a monthly Systematic Investment Plan (SIP) for 20 years, assuming an expected rate of return of 12%. This may seem like a significant amount, but it’s essential to consider the power of compounding and the potential for long-term growth.
To break it down further, let’s consider the math behind this calculation. Assuming an annual return of 12%, the monthly SIP of ₹55,000 would translate to an annual investment of ₹6,60,000. Over 20 years, the total investment would amount to ₹1,32,00,000. However, with the power of compounding, this investment could potentially grow to ₹5 crore, providing a substantial corpus for retirement.
For those aiming to build an even larger corpus of ₹6 crore, the investment amount would need to increase to ₹65,000 per month, assuming the same 12% expected rate of return. This would translate to an annual investment of ₹7,80,000, totaling ₹1,56,00,000 over 20 years. Again, the power of compounding would work its magic, potentially growing this investment to ₹6 crore by the time of retirement.
It’s worth noting that these calculations are based on certain assumptions, including the expected rate of return and the consistency of investments. In reality, market fluctuations and other factors may impact the actual returns. Therefore, it’s essential to review and adjust your investment strategy regularly to ensure you’re on track to meet your retirement goals.
So, what can individuals do to build a ₹5-6 crore corpus for retirement if they begin investing at 40? Here are a few key takeaways:
- Start with a clear plan: Define your retirement goals and create a tailored investment strategy to achieve them.
- Invest consistently: Set up a monthly SIP to ensure consistent investments, regardless of market fluctuations.
- Be patient and disciplined: Avoid the temptation to withdraw from your investments or deviate from your plan.
- Monitor and adjust: Regularly review your investment portfolio and adjust your strategy as needed to ensure you’re on track to meet your goals.
- Consider professional advice: If you’re unsure about how to get started or need guidance on creating a personalized investment plan, consider consulting a financial advisor.
In conclusion, building a ₹5-6 crore corpus for retirement is achievable, even if you start investing at 40. By creating a clear plan, investing consistently, and being patient and disciplined, individuals can potentially accumulate a substantial corpus by the time of retirement. Remember to monitor and adjust your strategy regularly, and consider seeking professional advice if needed.
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