How can people build ₹5-6 crore corpus for retirement if they begin investing at 40
As the adage goes, “it’s never too late to start.” This holds particularly true when it comes to planning for retirement. Many individuals often procrastinate when it comes to investing for their golden years, and before they know it, they’ve reached the age of 40. However, with a solid plan and disciplined investing, it’s still possible to build a substantial retirement corpus, even if you’re starting at 40.
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 outlay of ₹55,000 to ₹65,000, respectively, over a period of 20 years, assuming an expected rate of return of 12%. This may seem like a daunting task, but with a well-thought-out strategy, it’s achievable.
To put this into perspective, let’s consider the numbers. Assuming a retirement age of 60, a person has 20 years to accumulate a corpus that will last them for the rest of their life. With the power of compounding, even a modest monthly investment can grow significantly over time. In this case, investing ₹55,000 per month in a SIP at an expected rate of return of 12% can yield a corpus of approximately ₹5 crore in 20 years. Similarly, investing ₹65,000 per month can result in a corpus of around ₹6 crore.
It’s essential to note that these numbers are based on certain assumptions, including the expected rate of return, which may vary depending on the investment instrument and market conditions. Additionally, these calculations do not take into account other factors that may impact the corpus, such as inflation, taxes, and expenses.
So, how can individuals achieve this feat? Here are some tips to help you build a substantial retirement corpus, even if you’re starting at 40:
- Start early: While it’s never too late to start, the earlier you begin, the better. Even if you’re 40, starting now is better than delaying it further.
- Be disciplined: Investing for retirement requires discipline and consistency. Set aside a fixed amount each month and stick to it.
- Choose the right investment: Select an investment instrument that aligns with your risk tolerance and expected rate of return. Equity mutual funds, for instance, have historically provided higher returns over the long term, but they also come with higher risks.
- Diversify your portfolio: Spread your investments across different asset classes to minimize risk and maximize returns.
- Monitor and adjust: Regularly review your investment portfolio and adjust your strategy as needed to ensure you’re on track to meet your retirement goals.
- Avoid dipping into your corpus: Resist the temptation to withdraw from your retirement corpus for non-essential expenses. This will help you avoid depleting your savings and ensure that your corpus continues to grow over time.
- Consider professional advice: If you’re unsure about how to invest or need help creating a retirement plan, consider consulting a financial advisor.
In conclusion, building a retirement corpus of ₹5-6 crore is achievable, even if you’re starting at 40. By investing ₹55,000 to ₹65,000 per month in a SIP at an expected rate of return of 12%, you can create a substantial corpus over a period of 20 years. However, it’s essential to be disciplined, patient, and strategic in your approach. With the right plan and investment strategy, you can ensure a comfortable and secure retirement.
About the Author
