How can people build ₹5-6 crore corpus for retirement if they begin investing at 40
As we age, our priorities and financial goals change. For many of us, retirement planning becomes a significant concern as we approach our 40s. Building a substantial retirement corpus is essential to ensure a comfortable and secure post-retirement life. However, the question remains: how can individuals who start investing at 40 build a significant retirement corpus?
According to a recent report by NDTV Profit, a person aged 40 can build a retirement corpus of ₹5-6 crore by investing in a systematic investment plan (SIP) with a monthly investment of ₹55,000-₹65,000 for 20 years, assuming an expected rate of return of 12%. This calculation is based on the assumption that the retirement age is 60.
To break it down further, if an individual wants to build a retirement corpus of ₹5 crore, they would need to invest ₹55,000 per month in a SIP for 20 years, earning an expected return of 12% per annum. Similarly, to build a corpus of ₹6 crore, the monthly investment would need to be ₹65,000, with the same expected rate of return.
It’s essential to note that these calculations are based on certain assumptions and may not reflect the actual market performance. However, they do provide a general idea of the amount of investment required to build a substantial retirement corpus.
Why start investing at 40?
While it’s ideal to start investing for retirement early, many individuals may not have the means or the awareness to do so in their 20s or 30s. However, starting to invest at 40 can still be beneficial, as it allows individuals to take advantage of the power of compounding over the next 20 years.
Moreover, investing in a SIP can help individuals discipline themselves to save and invest regularly, which is crucial for building a substantial retirement corpus. By starting to invest at 40, individuals can also take advantage of their increased earning potential, as they are likely to be in their peak earning years.
How to build a ₹5-6 crore corpus
To build a ₹5-6 crore corpus, individuals can follow these steps:
- Start with a clear goal: Define your retirement goals and calculate the amount of corpus you need to build.
- Choose the right investment: Consider investing in a SIP, which allows you to invest a fixed amount regularly.
- Select a suitable asset allocation: Allocate 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 adjust your asset allocation as needed to ensure you are on track to meet your retirement goals.
- Be disciplined: Stick to your investment plan and avoid withdrawing from your corpus until retirement.
Benefits of starting to invest at 40
Starting to invest at 40 has several benefits, including:
- Power of compounding: Investing over the next 20 years can help your corpus grow significantly, thanks to the power of compounding.
- Increased earning potential: Individuals in their 40s are likely to be in their peak earning years, allowing them to invest more and build a substantial corpus.
- Disciplined investing: Investing in a SIP can help individuals discipline themselves to save and invest regularly.
- Flexibility: Starting to invest at 40 allows individuals to adjust their investment plan as needed to ensure they meet their retirement goals.
Conclusion
Building a ₹5-6 crore corpus for retirement is achievable, even if individuals start investing at 40. By investing ₹55,000-₹65,000 per month in a SIP for 20 years, earning an expected return of 12% per annum, individuals can build a substantial retirement corpus. It’s essential to start with a clear goal, choose the right investment, select a suitable asset allocation, monitor and adjust, and be disciplined in your investment approach. By following these steps and taking advantage of the power of compounding, individuals can ensure a comfortable and secure post-retirement life.
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