How can people build ₹5-6 crore corpus for retirement if they begin investing at 40
As we approach our 40s, the reality of retirement planning starts to set in. Many of us may have put off thinking about our golden years, but it’s essential to start planning and investing for retirement as early as possible. The question on everyone’s mind is: how can I build a substantial corpus for retirement, especially if I’m starting to invest at 40? According to a recent report by NDTV Profit, it’s still possible to accumulate a significant amount for retirement, even if you begin investing at 40.
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 amount may seem daunting, but it’s essential to remember that investing regularly and consistently can help you reach your goals. Breaking it down further, if you start investing ₹55,000 per month at 40, you’ll have invested a total of ₹1.32 crore over 20 years. However, with a 12% annual return, your corpus will grow to ₹5 crore, providing a substantial nest egg for your retirement.
To build a retirement corpus of ₹6 crore, a person would need to invest ₹65,000 monthly in SIP at 12% return. This amount is slightly higher than the previous example, but the payoff is well worth it. By investing ₹65,000 per month for 20 years, you’ll have invested a total of ₹1.56 crore. However, with a 12% annual return, your corpus will grow to ₹6 crore, providing an even more substantial financial safety net for your retirement.
It’s essential to note that these calculations are based on certain assumptions, such as a consistent 12% annual return and regular monthly investments. In reality, market fluctuations and other factors may affect the actual performance of your investments. However, the key takeaway is that starting to invest at 40 and maintaining a disciplined investment approach can still help you build a substantial corpus for retirement.
So, how can you get started on building your retirement corpus? Here are a few tips:
- Start early: While it’s better to start investing earlier, it’s essential to begin as soon as possible, even if you’re 40. The power of compounding can still work in your favor, even with a shorter time horizon.
- Invest regularly: Set up a monthly SIP to invest a fixed amount regularly. This will help you avoid market timing and ensure that you’re investing consistently.
- Diversify your portfolio: Spread your investments across different asset classes, such as equity, debt, and hybrid funds, to minimize risk and maximize returns.
- Monitor and adjust: Regularly review your investment portfolio and rebalance it as needed to ensure that you’re on track to meet your retirement goals.
- Take advantage of tax benefits: Utilize tax-advantaged investment options, such as the National Pension System (NPS) or tax-saving mutual funds, to optimize your returns and reduce your tax liability.
In conclusion, building a retirement corpus of ₹5-6 crore is achievable, even if you start investing at 40. By investing regularly, diversifying your portfolio, and taking advantage of tax benefits, you can create a substantial nest egg for your golden years. Remember to stay disciplined, patient, and informed, and you’ll be well on your way to securing a comfortable retirement.
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