How can people build ₹5-6 crore corpus for retirement if they begin investing at 40
As the 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 start saving and investing for retirement from an early age, many individuals may find themselves in a situation where they’re just starting to think about retirement planning in their 40s. The good news is that it’s still possible to build a substantial retirement corpus even if you begin investing at 40. In this blog post, we’ll explore how individuals can accumulate ₹5-6 crore for retirement if they start investing at this age.
First and foremost, it’s essential to understand the importance of starting to invest for retirement as soon as possible. The power of compounding can work wonders when it comes to growing your wealth over time. However, when you start investing later in life, you’ll need to be more aggressive with your investments to achieve 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 an expected rate of return of 12% to build a retirement corpus of ₹5 crore.
To put this into perspective, let’s break down the numbers. If you start investing ₹55,000 per month at the age of 40, you’ll have invested a total of ₹13.2 lakh (₹55,000 x 12 months x 20 years) by the time you retire at 60. However, with an expected rate of return of 12%, your investments will grow to a staggering ₹5 crore. This highlights the power of compounding and the importance of starting to invest as soon as possible.
Now, if you’re aiming to build an even larger retirement corpus of ₹6 crore, you’ll need to invest ₹65,000 monthly in a SIP at an expected rate of return of 12%. This may seem like a significant amount, but it’s essential to remember that this is a long-term investment strategy. By investing consistently and discipline, you can potentially achieve your retirement goals and enjoy a comfortable post-work life.
It’s also important to note that these calculations are based on certain assumptions, such as an expected rate of return of 12% and a consistent investment amount. In reality, the actual returns on your investments may vary, and you may need to adjust your investment strategy accordingly. Additionally, it’s crucial to consider other factors, such as inflation, taxes, and fees, when planning for retirement.
So, what can you do to build a ₹5-6 crore corpus for retirement if you begin investing at 40? Here are some tips:
- Start investing immediately: The sooner you start investing, the more time your money has to grow. Even if you can’t invest ₹55,000 or ₹65,000 per month, start with a smaller amount and increase it over time.
- Be consistent: Consistency is key when it comes to investing. Set up a SIP and invest a fixed amount regularly, without fail.
- Diversify your portfolio: Spread your investments across different asset classes, such as stocks, bonds, and mutual funds, to minimize risk and maximize returns.
- Monitor and adjust: Keep track of your investments and adjust your strategy as needed. Rebalance your portfolio periodically to ensure it remains aligned with your retirement goals.
- Consider professional advice: If you’re new to investing, consider seeking the advice of a financial advisor. They can help you create a personalized investment plan tailored to your needs and goals.
In conclusion, building a ₹5-6 crore corpus for retirement is possible even if you start investing at 40. By investing consistently, diversifying your portfolio, and being patient, you can potentially achieve your retirement goals and enjoy a comfortable post-work life. Remember to start investing immediately, be consistent, and monitor and adjust your strategy as needed.
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