- Start SIP early for significant wealth creation over 30 years.
- Invest Rs 17,000 monthly to achieve a Rs 5 crore retirement corpus
- Even Rs 4,000 monthly SIP can build Rs 1 crore corpus.
When I first heard the very phrase ‘Retirement Planning’, I was like, "Why worry about retirement at this young age”. I had just entered the employment phase after college. However, after around 5 years, my thoughts have changed completely. I have realised that it takes time to create wealth and expenses are only going to go up with inflation. So, everyone must act to secure financial freedom for their older age and some other important expenses that we will encounter in the future–mediacal expenses, child education and marriages. Investing in mutual funds could be a great toll to initiate a wealth creation journey with small recurring investment.
Let’s assume, you are 30 years old and have missed the opportunity to start investing in your early twenties. Now, you think of accumulating a corpus of Rs 5 crores in the next 30 years—by the age of retirement. Here's an estimated calculation on ‘how much you need to contribute every month to reach your financial goal.
Mutual Fund SIP Calculation: Rs 5 Crore Corpus
Accumulating Rs 5 crore by the age of 60 by investing through SIPs could be possible. However, it will take a commitment of consistency and resilience against ups and downs in the stock market as investing in mutual funds is subject to stock market risk.
Calculation
Monthly investment: rs 17,000
Estimated average return: 12 per cent
Years of investment: 30
Total investment over 30 years: Rs 61,20,000
Fund created over 30 years: Rs 5,23,76,545
The calculations with an expected return of 12 per cent throughout the period, clearly show that you can accumulate a corpus of Rs 5 crore with an investment of Rs 17,000 as SIP–investing Rs 61 lakh in 30 years.
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SIP Calculation: 1 Crore Corpus
However, If a monthly SIP of Rs 17,000 is difficult for you–as per your earnings. Then your target should be investing a smaller amount as per your convenience. Here’s how much monthly SIPI, it takes to accumulate a 1 crore corpus in the next 30 years.
Monthly Investment: Rs 4,000
Estimated Average Return: 12 per cent
Years of Investment: 30
Total Investment in 30 Years: Rs 14,40,000
Fund Created in 30 Years: Rs 1,23,23,893
Calculations clearly show that even if you do a SIP of ₹4,000 every month, you will accumulate a corpus of over ₹1 crore in 30 years. This will not only save you from having to invest large sums every month, but will also maintain your investing habit.
What to Keep in Mind?
Creating a wealth is a marathon not an sprit. Meanwhile If you start investing, always invest according to your risk appetite and needs. If you cannot take risks, invest in a safe avenues. However, if your goal is small, invest accordingly.
Disclaimr: Disclaimer: This story is for investment purposes only. It should not be considered as investment advice. Please seek guidance from a professional before investing. All the calulation based on assumption only.