For most people, building a retirement corpus of Rs 5 crore may appear to be a distant dream. However, with effective planning and disciplined investment, it is possible to reach this goal before you retire. One of the most common myths is that you need a huge amount to build a large corpus. With the rapidly evolving financial landscape in India, investors can even build a sizeable retirement corpus with small investments every month.
When it comes to retirement planning, you just need to remain consistent and choose the right investment instruments aligned to your financial goals.
Mutual fund systematic investment plans have become one of the most preferred options among Indian investors in recent years as they offer enormous flexibility to choose the amount and tenure as per your goals. If you start your investment journey at 25 with a modest investment of Rs 10,000 every month in an SIP, it can potentially grow to a large corpus by the time you retire at the age of 60 due to the power of compounding.
Rs 10,000 Monthly SIP To Accumulate Rs 5 Crore By Retirement
Let’s see how your monthly SIP of Rs 10,000 over 35 years can grow at an assumed interest rate of 12% per annum:
- SIP amount: Rs 10,000 per month
- Investment duration: 35 years
- Expected rate of return: 12%
- Invested amount: Rs 42,00,000
- Estimated returns: Rs 6,07,52,690
- Total value: Rs 6,49,52,690
Also Read: Rs 10 Crore In 30 Years? Here’s The Monthly SIP You Need To Start With
You can even reach the target of Rs 5 crore through a monthly SIP of Rs 10,000 in around 33 years at an assumed interest rate of 12% per annum.
The scenario becomes even more powerful with a step-up SIP, which allows you to increase investments by a certain percentage every year. By increasing the investments by 10% every year, the Rs 5 crore target can be reached much earlier.
Here’s how:
- SIP amount: Rs 10,000 monthly
- Step-up SIP: 10% yearly
- Investment duration: 27 years
- Expected rate of return: 12%
- Invested amount: Rs 1,45,31,993
- Estimated returns: Rs 4,28,46,603
- Total value: Rs 5,73,78,596
The above calculations illustrate two key principles for building a retirement corpus: start early and increase contributions over time.
Even with a modest investment of Rs 10,000 per month, disciplined investing, combined with the power of compounding, can help build a corpus that ensures a stress-free retirement.
Essential Business Intelligence,
Continuous LIVE TV,
Sharp Market Insights,
Practical Personal Finance Advice and
Latest Stories — On NDTV Profit.
