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Retirement Planning: 'Financial Security' is something special and essential that you can gift yourself for your old age period and this can be achieved by starting investing for the same from an early age. If you need a goal or a motive to keep yourself running behind it, you should set a goal to be retired with a decent corpus so that you can live the rest of your life happily and manage to create further wealth as well.

Retirement Funds can only be accumulated by investing a definite proportion of earnings for a long period. To do so, you need to first choose investment instruments considering your earnings, risk-taking ability, and the kind of return you want to get with your investment.

There are a lot of investment options available nowadays out of which NPS and Mutual Fund SIP are considered to be a high return medium. Here, we would give an idea about, how much retirement fund you may create by investing Rs 5,000 monthly for 30 years in both the investment mode.

National Pension Scheme

National Pension Scheme is a small saving scheme, which offers a return at an average of 10%. It is equity equity-linked investment instrument managed by the government.

Scenario: If we consider a 10% interest rate as an average return for 30 years and Rs 5000 as a monthly investment then a fund of one crore thirteen lakhs nineteen thousand and six hundred twenty-seven (Rs 1,13,96,627) can be accumulated.

Total Investment in 30 years - Rs 18 Lacs

Total Corpus will be - Rs 1,13,96,627

Total Return on Investment (gain) - Rs 95,96,627

At the time of maturity, the investors may be getting Rs 4558651 as an annuity and Rs 6837976 as a lump sum. The pension amount can be Rs 22,793.

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Mutual Fund

A Mutual Fund is probably the most essential investment instrument to create a big corpus if you want to invest in SIP. The investment in mutual funds is a bit risky as compared to NPS, but the return can be high as well. Considering the historical data, it is expected that the investment in mutual funds yields an average return of 12%.

Considering the 12% return rate the calculation of returns of a rs 5,000 SIP for 30 years is followed...

Total amount - Rs 18 Lakhs

Return on Investment - 1.58 Crore

Total Value - 1.76 Crore (Principal + Return)

Average Returns - 12%

Note: Please take expert advice before investing.

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