How can people build ₹5-6 crore corpus for retirement if they begin investing at 40
As the saying goes, “it’s never too late to start.” This holds particularly true when it comes to retirement planning. Many individuals often find themselves wondering if they have left it too late to start investing for their golden years. However, with a well-thought-out plan and consistent investing, it is possible to build a substantial retirement corpus even if you begin at the age of 40.
Considering the retirement age to be 60, a person aged 40 has 20 years to accumulate a sizeable 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 daunting task, but it is achievable with discipline and patience.
To break it down further, let’s consider the power of compounding. When you invest a fixed amount of money at regular intervals, it has the potential to grow exponentially over time. The key is to start early and be consistent. In this case, investing ₹55,000 per month for 20 years may seem like a significant outlay, but it can lead to a substantial corpus of ₹5 crore.
For those who aspire 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 12% return to achieve this goal. While this may seem like a stretch, it is essential to remember that investing for retirement is a long-term game. With a well-planned strategy and consistent investing, it is possible to achieve your goals.
So, how can individuals go about building a ₹5-6 crore corpus for retirement if they begin investing at 40? Here are a few tips:
- Start with a plan: The first step is to create a retirement plan that takes into account your income, expenses, and goals. This will help you determine how much you need to invest each month to achieve your target corpus.
- Choose the right investments: With a 20-year horizon, you can afford to take some risk and invest in assets that have the potential to generate higher returns, such as equities. However, it is essential to diversify your portfolio to minimize risk.
- Be consistent: Investing a fixed amount of money at regular intervals is crucial to building a sizeable corpus. Set up a SIP and stick to it, even during market downturns.
- Monitor and adjust: As you progress towards your goal, it is essential to monitor your investments and adjust your plan as needed. This may involve rebalancing your portfolio or increasing your investment amount.
- Avoid unnecessary expenses: To achieve your retirement goals, it is crucial to avoid unnecessary expenses and save as much as possible. Cut back on discretionary spending and direct the savings towards your retirement corpus.
In conclusion, building a ₹5-6 crore corpus for retirement is achievable even if you begin investing at 40. With a well-planned strategy, consistent investing, and patience, you can create a substantial corpus that will provide for your golden years. Remember to start with a plan, choose the right investments, be consistent, monitor and adjust, and avoid unnecessary expenses.
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