Unbelievable, did you say? Ramalingam Kalirajan explains the simple math.
Planning for retirement early is one of the smartest financial decisions you can make. A steady habit of saving and investing ensures you can enjoy financial independence and maintain your lifestyle even after retirement.
But how can you turn a monthly savings of Rs 20,000 into an impressive Rs 15 crore? Let's explore.
Why Retirement Planning Matters
Retirement is the phase of life where you want financial freedom without worrying about a regular paycheck. Proper planning not only provides financial security but also ensures a regular income to maintain your lifestyle and handle emergencies.
Imagine a retirement where you can travel, pursue hobbies, and support your family without worrying about money. Doesn't that sound wonderful? That's the power of a well-planned retirement corpus.
The Best Time to Start Retirement Planning
When should you start planning for retirement? The answer is simple: as early as possible. Starting early gives you the advantage of compounding -- where your earnings generate even more earnings over time.
But what if you've started late? Don't worry! It's never too late to begin your investment journey. What matters most is consistency and discipline in saving and investing.
Building Wealth Through SIPs
A Systematic Investment Plan (SIP) in mutual funds is an excellent tool to build wealth over time. With SIPs, you invest a fixed amount at regular intervals, such as monthly, and benefit from compounding and market growth.
What's more? SIPs are flexible. You can adjust the amount, pause, or restart whenever necessary, giving you control over your investments.
How Can Rs 20,000 Monthly Help You Build Rs 15 Crore?
Let's assume you earn Rs 1 lakh per month and dedicate 20 per cent of your income -- Rs 20,000 -- to a mutual fund SIP. With an expected annualised return of 12 per cent, here's how your retirement corpus will grow:
1. In 10 Years
- Invested Amount: Rs 24,00,000
- Capital Gains: Rs 22,46,782
- Total Corpus: Rs 46,46,782
2. In 20 Years
- Invested Amount: Rs 48,00,000
- Capital Gains: Rs 1,51,82,958
- Total Corpus: Rs 1,99,82,958
3. In 30 Years
- Invested Amount: Rs 72,00,000
- Capital Gains: Rs 6,34,00,000
- Total Corpus: Rs 7,06,00,000
4. In 37 Years
This is where the magic of compounding shines!
- Invested Amount: Rs 88,80,000
- Capital Gains: Rs 15,66,10,228
- Total Corpus: Rs 16,54,90,228
The longer you stay invested, the larger your corpus grows. Starting early maximises the compounding effect, helping you reach your goal of Rs 15 crore comfortably.
Why SIPs Work So Well for Retirement
Disciplined Approach: SIPs encourage regular savings, which is essential for building a retirement corpus.
Power of Compounding: Over time, your returns start generating returns, creating exponential growth.
Flexibility: SIPs allow you to adjust investments based on income changes or goals.
Conclusion
A well-planned retirement ensures financial independence, stability, and peace of mind. By saving Rs 20,000 monthly through a mutual fund SIP, you can achieve an impressive Rs 15 crore retirement corpus over 37 years.
So, why wait? The earlier you start, the more time you give your money to grow. Start planning today and secure the retirement lifestyle you've always dreamed of!
- You can ask rediffGURU Ramalingam Kalirajan your questions HERE.
Ramalingam K, an MBA in Finance, is a Certified Financial Planner. He is the Director and Chief Financial Planner at holisticinvestment, a leading financial planning and wealth management company
Disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products/investment products mentioned in this article to influence the opinion or behaviour of the investors/recipients.
Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.
