PM Modi13 min ago
Retirement Planning via SIP: Starting at age 25, how much money can you expect to generate by 60 with Rs 9,000 monthly investment?
- Written by Priya Vishwakarma
Published: Zee Business| Updated: Zee Business
Retirement planning via SIP: With rising inflation, are you also worried about your life after retirement? Do you think you will be able to afford expenses even after crossing the age of 60, when you will not have any job? If yes, then instead of worrying, you can start investing for your future while you are still earning.
Starting investing early can give you an edge over those who start late, and when you turn 60, you can build a large corpus with modest monthly Systematic Investment Plan (SIP) investments in a mutual fund scheme. However, it should be noted that this investment approach requires discipline and consistency.
(Disclaimer: This is not investment advice. Calculations are projections. Please do your own due diligence or consult an advisor for retirement planning.)
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What is an SIP mutual fund?
1/10SIP or Systematic Investment Plan is an investment strategy linked to the stock market where an investor can invest money based on their financial capacity in mutual funds.
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Benefits of SIP for retirement planning
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Power of Compounding
No lock-in period, investor gets to choose
Rupee cost averaging
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Power of compounding in SIP retirement
3/10SIP uses the power of compounding to multiply your returns. Basically, it creates a snowball effect that helps your investments grow exponentially over time.
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Retirement planning at age 25 with SIP
4/10So, how much money can you generate by age 60 with a monthly SIP investment of Rs 9,000? We will find in this write-up, but before we proceed, let's understand the scenario.
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Understand the scenario
5/10Scenario: Suppose you are a 25-year-old individual and are able to invest Rs 9,000 every month in a SIP mutual fund. Since you are making these investments for your post-retirement life, you have time to invest the money till the age of 60, i.e., 35 years. Well, in that case:
Monthly investment: Rs 9,000/month Time: 35 years Annual return: 12 per cent (assuming)6/10
SIP returns for 35 years investment: How much money can you accumulate with Rs 9,000 SIP?
6/10With a 12 per cent annual return rate, you can accumulate a total of Rs 4.95 crore in 35 years with a monthly SIP of Rs 9,000, the calculation shows.
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Mutual fund SIP annual returns: How much money will you invest in total in these 35 years?
7/10You will invest a total of Rs 37,80,000 in 35 years.
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Estimated capital gains SIP retirement: What may be the capital gains with a Rs 9,000 monthly SIP?
8/10Assuming a 12 per cent annualised return, your estimated capital gain in 35 years would be Rs 4,58,17,480.
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Investing Rs 9000 monthly in SIP for retirement: Total Calculation
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Total Investment Amount: Rs 37,80,000
Estimated Capital Gains: Rs 4,58,17,480
Total Approx. Return: Rs 4,95,97,480
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SIP: Understanding risks
10/10It’s important to know that SIP is a market-linked scheme, so returns are not guaranteed. The actual returns may vary depending on market conditions.
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