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.” When it comes to retirement planning, this couldn’t be more true. While it’s ideal to start saving for retirement from an early age, it’s not impossible to build a substantial corpus even if you begin investing at 40. In this blog post, we’ll explore how individuals can create a ₹5-6 crore retirement corpus if they start investing at the age of 40.
First and foremost, it’s essential to understand the importance of retirement planning. Retirement is a significant life milestone that requires careful financial planning to ensure a comfortable and secure post-work life. With increasing life expectancy and rising healthcare costs, it’s crucial to have a substantial corpus to cater to your needs during retirement.
Now, let’s crunch some numbers to understand how individuals can build a ₹5-6 crore corpus if they start 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, as reported by NDTV Profit. To build a retirement corpus of ₹6 crore, a person would need to invest ₹65,000 monthly in SIP at 12% return.
These numbers may seem daunting, but it’s essential to remember that investing for retirement is a long-term game. By starting early, even if it’s at 40, individuals can leverage the power of compounding to grow their wealth over time. Compounding is the process of earning returns on your returns, which can lead to significant growth in your corpus over the long term.
To illustrate this, let’s consider an example. Suppose an individual invests ₹55,000 per month in a SIP for 20 years, earning an average return of 12% per annum. Assuming the returns are compounded monthly, the total corpus at the end of 20 years would be approximately ₹5.03 crore. This calculation takes into account the monthly investments, expected returns, and compounding effect.
Now, let’s talk about the importance of discipline and consistency in investing for retirement. It’s crucial to stick to your investment plan and avoid withdrawing from your corpus prematurely. By doing so, you can ensure that your wealth grows consistently over time, helping you achieve your retirement goals.
In addition to discipline and consistency, it’s also essential to diversify your investments to minimize risk. A well-diversified portfolio can help you navigate market fluctuations and ensure that your corpus grows steadily over the long term. This can be achieved by investing in a mix of asset classes, such as equities, debt, and hybrid funds.
Another critical aspect of retirement planning is to review and adjust your investment plan periodically. As you approach retirement, your investment goals and risk tolerance may change. It’s essential to review your portfolio and rebalance it to ensure that it remains aligned with your changing needs.
In conclusion, building a ₹5-6 crore corpus for retirement is achievable even if you start investing at 40. By investing ₹55,000-₹65,000 per month in a SIP for 20 years at a 12% expected rate of return, individuals can create a substantial corpus to cater to their needs during retirement. It’s essential to remember the importance of discipline, consistency, diversification, and regular review of your investment plan to ensure that you achieve your retirement goals.
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