Power of Compounding: Is 40 too late for retirement planning? Know how you can still build Rs 1 crore & Rs 3 crore corpus through SIP

So, let’s suppose you are 40 years old and want to build a corpus of Rs 1 crore by the age of 60. To achieve this goal, you need to be disciplined, consistent, and start investing the right amount of money monthly in SIPs. Yes, it is possible - with the right Systematic Investment Plan (SIP) strategy and financial discipline. However, investing over a long period of 20 years means you can take a little risk too, and this could be the key to better returns.

Now, the most important question that may arise in the minds of many of us is where to invest this money. For long-term and relatively stable returns, investors can consider: Large-cap mutual funds Low-cost index funds (e.g., Nifty 50 or Sensex-based)

According to the calculations, if you invest Rs 7,600 monthly in a good mutual fund SIP and the market gives an annualised return rate of 15 per cent, then you can easily accumulate over Rs 1 crore in 20 years.

Well, in this case, you need to invest around Rs 10,900 monthly to reach a Rs 1 crore corpus in 20 years.

So, this is how you can accumulate Rs 1 crore in 20 years. Although this Rs 1 crore may seem like a huge amount today, its value will decrease significantly in the next 20 years due to inflation.

For example, if inflation grows at an average rate of 6 per cent every year, then something that costs Rs 1 lakh today will cost around Rs 3.2 lakh in 20 years. This means that the purchasing power of Rs 1 crore today will be equivalent to just Rs 31-32 lakh after 20 years.

Keeping in mind inflation, rising expenses, and lifestyle needs, you should invest money in SIP mutual funds every month to accumulate a sufficient amount for your retirement.

So, now, you have to create a fund of Rs 3 crore, which requires investing a SIP amount of Rs 32,000-33,000 each. However, this can be quite challenging for a typical middle-class family. In this case, StepUp SIP can be the savior.

Step-up SIP is a type of SIP in which investors increase the investment amount annually - aligned with income growth. For example:

Year 1: Rs 5,500 Year 2: Rs 6,050 (10% increase) Year 3: Rs 6,655   ...and so on.