How can people build ₹5-6 crore corpus for retirement if they begin investing at 40
As we approach our 40s, many of us start thinking about our retirement and how we can ensure a comfortable life after we stop working. Building a significant retirement corpus is essential to maintain our standard of living and enjoy our golden years without financial stress. However, creating a substantial corpus requires discipline, patience, and a well-planned investment strategy. In this blog post, we will explore how people can build a ₹5-6 crore corpus for retirement if they begin investing at 40.
First, let’s consider the retirement age to be 60, which is a common assumption. With 20 years to go before retirement, a person aged 40 has a decent amount of time to create a substantial corpus. According to a report by NDTV Profit, to build a retirement corpus of ₹5 crore, a person should invest ₹55,000 in a monthly Systematic Investment Plan (SIP) for 20 years at an expected rate of return of 12%. This may seem like a significant amount to invest each month, but it’s essential to remember that consistent investing and compounding can work wonders over the long term.
To put this into perspective, let’s break down the calculation. Assuming a 12% annual return, the total amount invested over 20 years would be approximately ₹1.32 crore (₹55,000 per month x 12 months x 20 years). However, due to the power of compounding, the corpus would grow to around ₹5 crore, providing a substantial retirement fund.
Now, if someone aims to build an even larger corpus of ₹6 crore, the investment amount would need to increase. According to the same report, to build a retirement corpus of ₹6 crore, a person would need to invest ₹65,000 monthly in SIP at 12% return. This is an increase of ₹10,000 per month compared to the ₹5 crore corpus, but the potential reward is significant.
It’s essential to note that these calculations are based on certain assumptions, such as a consistent 12% annual return and no withdrawals or interruptions in the investment schedule. In reality, market fluctuations and other factors may impact the actual returns. Therefore, it’s crucial to review and adjust the investment strategy periodically to ensure that the retirement corpus is on track to meet the desired goal.
So, what can people do to build a ₹5-6 crore corpus for retirement if they begin investing at 40? Here are some tips:
- Start early: While 40 may seem late to start investing for retirement, it’s essential to begin as soon as possible. The power of compounding can still work in your favor, even if you start later in life.
- Invest consistently: Set up a monthly SIP to invest a fixed amount regularly, regardless of market conditions. This will help you average out the costs and reduce the impact of market volatility.
- Choose the right investments: Consider investing in a mix of low-risk and high-risk assets, such as stocks, bonds, and mutual funds, to balance your portfolio and potentially increase returns.
- Monitor and adjust: Review your investment portfolio periodically and adjust your strategy as needed to ensure that you’re on track to meet your retirement goals.
- Avoid withdrawals: Try to avoid withdrawing from your retirement corpus until you actually retire, as this can significantly impact the growth of your investments.
In conclusion, building a ₹5-6 crore corpus for retirement is achievable if you start investing at 40 and follow a disciplined investment strategy. While it may require significant monthly investments, the potential reward is substantial. By starting early, investing consistently, choosing the right investments, monitoring and adjusting your portfolio, and avoiding withdrawals, you can increase your chances of creating a comfortable retirement corpus.
About the Author
