Missed early investing? How as 35-year-old, you may still build Rs 5 cr corpus with Rs 20,000 step up SIP

Retirement Planning: Beginning to invest at 25 years compared to 35 can give a significant edge to an investor as 10 years of extra compounding may produce extraordinary results in the long run. But even if someone has lost early precious years, they have a fair chance to create a sizeable corpus to meet their financial goals.

It's just that once they start, they remain consistent and step up the investment amount as their income rises.

Starting at 35, they may create a Rs 5 crore corpus or even a larger amount given their investment amount and return.

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But even if they target an approximately Rs 5 crore corpus by age 60, they may achieve it by starting a Rs 20,000 monthly SIP amount. Know how it may be possible-

Long investment horizon

If a person is 35 years old and wants to create a corpus by 60 years of age, they have 25 years to invest, which is quite a long duration for compound growth on investments.

Starting an investment

One should invest at least 10 per cent amount of their earnings. Investing a 20 per cent can be a good ratio, and anything above that will help an investor achieve larger goals.

But equally important is to increase the investment amount once income increases.

Let's see the example of Rs 5,000 monthly SIP investment at a 12 per cent annualised return in 25 years.

In 25 years, the total investment will be Rs 15,00,000, estimated capital gains will be Rs 70,11,033 and the estimated corpus will be Rs 85,11,033.

In the next step, let's see what will happen if the investment amount is increased by 5 per cent annually.

Step up SIP

If the average income of an individual is increasing by 5 per cent every year, they may increase the investment amount by the same percentage.

Or, if they don't have many liabilities, they may increase the amount by a higher percentage.

Similarly, if they have an Rs 5,000 SIP investment, they may increase their investment by the same percentage.

How 35-year-old can create Rs 5 cr retirement corpus

If they start a Rs 20,000 monthly SIP investment in a mutual fund, get an annualised return of 12 per cent, and step up the amount by 5 per cent every year, they may create an estimated corpus of Rs 4,96,56,970 in 25 years.

During those years, their total investment will be Rs 1,14,54,504, and the estimated capital gains will be Rs 3,82,02,466.

(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)