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. While it’s ideal to begin saving and investing for retirement from an early age, many individuals may find themselves starting later in life, often due to various circumstances. If you’re 40 years old and have just begun to think about your retirement planning, don’t worry – it’s still possible to build a substantial corpus for your golden years. In this article, we’ll explore how you can accumulate ₹5-6 crore for retirement if you start investing at 40.
First and foremost, it’s essential to understand the importance of starting to invest as soon as possible. The power of compounding can work wonders for your investments, and the earlier you begin, the more time your money has to grow. However, if you’re starting at 40, you’ll need to be more aggressive with your investments to reach your retirement goals.
According to a report by NDTV Profit, considering the retirement age to be 60, a person aged 40 should invest ₹55,000 in a monthly Systematic Investment Plan (SIP) for 20 years at a 12% expected rate of return to build a retirement corpus of ₹5 crore. This may seem like a significant amount, but it’s essential to remember that consistent investing can lead to substantial wealth creation over time.
To give you a better idea, let’s break down the calculation:
- Monthly investment: ₹55,000
- Investment tenure: 20 years
- Expected rate of return: 12% per annum
- Retirement corpus: ₹5 crore
As you can see, the monthly investment amount may seem steep, but it’s essential to consider the long-term benefits. If you’re unable to invest ₹55,000 per month, you can start with a lower amount and gradually increase it over time. The key is to be consistent and disciplined in your investment approach.
Now, if you’re aiming to build an even larger retirement corpus of ₹6 crore, the investment amount would need to be higher. According to the same report, a person would need to invest ₹65,000 monthly in SIP at a 12% return to reach this goal. This highlights the importance of having a clear understanding of your retirement goals and creating a tailored investment plan to achieve them.
Creating a retirement investment plan
So, how can you create a retirement investment plan that works for you? Here are a few steps to consider:
- Define your retirement goals: Start by determining what you want your retirement to look like. Do you want to travel, pursue hobbies, or simply enjoy time with family and friends? Having a clear understanding of your goals will help you determine how much you need to save.
- Assess your current finances: Take stock of your current income, expenses, assets, and liabilities. This will help you understand how much you can afford to invest each month.
- Choose the right investments: Consider a mix of low-risk and high-risk investments, such as fixed deposits, mutual funds, and stocks. It’s essential to diversify your portfolio to minimize risk and maximize returns.
- Start investing regularly: Set up a systematic investment plan to invest a fixed amount of money at regular intervals. This could be monthly, quarterly, or annually, depending on your financial situation.
- Monitor and adjust: Regularly review your investment portfolio and adjust your strategy as needed. This will help you stay on track and ensure that you’re on course to meet your retirement goals.
Conclusion
Building a retirement corpus of ₹5-6 crore may seem daunting, but it’s achievable if you start investing consistently and aggressively. By understanding the importance of starting early, creating a tailored investment plan, and being disciplined in your approach, you can set yourself up for a comfortable and secure retirement. Remember, it’s never too late to start, and even small, consistent investments can add up over time.
As you begin your retirement planning journey, keep in mind that it’s essential to stay informed and up-to-date on the latest investment trends and strategies. By doing so, you’ll be better equipped to make informed decisions and create a retirement corpus that will support you in your golden years.
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