How can people build ₹5-6 crore corpus for retirement if they begin investing at 40
As the popular adage goes, “it’s never too late to start.” However, when it comes to retirement planning, the earlier you start, the better. But what if you’re already 40 and haven’t begun investing for your retirement yet? Don’t worry, it’s still possible to build a substantial corpus for your golden years. According to a report by NDTV Profit, with a well-planned investment strategy, you can accumulate ₹5-6 crore for retirement even if you start investing at 40.
Considering the retirement age to be 60, a person aged 40 should invest ₹55,000 in a monthly SIP (Systematic Investment Plan) for 20 years at a 12% expected rate of return to build a retirement corpus of ₹5 crore. 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 with a disciplined approach to investing, it’s achievable.
So, how can you build a ₹5-6 crore corpus for retirement if you begin investing at 40? Here are some steps to help you get started:
- Start with a clear goal: The first step to building a retirement corpus is to define your goal. Calculate how much you need to save each month to reach your target corpus. As mentioned earlier, you’ll need to invest ₹55,000-₹65,000 per month for 20 years to build a corpus of ₹5-6 crore.
- Choose the right investment vehicle: There are various investment options available, such as mutual funds, stocks, and fixed deposits. However, for long-term goals like retirement, it’s essential to invest in a tax-efficient and high-return investment vehicle. Equity mutual funds or a mix of equity and debt funds can be a good option.
- Invest consistently: Investing a fixed amount regularly through a SIP can help you navigate market volatility and avoid timing risks. It’s essential to invest consistently, without missing a single installment, to reach your target corpus.
- Monitor and adjust: As you progress towards your goal, it’s crucial to monitor your investments and adjust your strategy as needed. You may need to increase your investment amount or switch to a different investment vehicle to ensure you’re on track to meet your target corpus.
- Avoid withdrawals: It’s essential to avoid withdrawing from your retirement corpus until you actually retire. Withdrawing from your investments can significantly reduce your corpus, making it challenging to reach your target.
- Take advantage of tax benefits: Utilize tax benefits available on retirement investments, such as tax deductions on contributions to the National Pension System (NPS) or tax-free withdrawals from certain investments.
- Diversify your portfolio: Diversification is key to minimizing risk and maximizing returns. Invest in a mix of asset classes, such as equity, debt, and commodities, to ensure your portfolio is well-diversified.
- Seek professional advice: If you’re new to investing or unsure about how to create a retirement plan, consider seeking advice from a financial advisor. They can help you create a personalized plan tailored to your needs and goals.
Building a ₹5-6 crore corpus for retirement requires discipline, patience, and a well-planned investment strategy. While it may seem challenging, it’s achievable if you start investing consistently and monitor your progress regularly. Remember, it’s never too late to start, and even small, consistent investments can add up over time.
In conclusion, building a substantial retirement corpus requires careful planning, discipline, and patience. By starting early, investing consistently, and monitoring your progress, you can create a significant corpus for your golden years. Even if you’re starting at 40, it’s still possible to build a ₹5-6 crore corpus for retirement with a well-planned investment strategy.
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