Are you 25, 30, or 35 years old? Know how much you need to invest in SIP/month to generate Rs 5 crore corpus by retirement
SIP Investment: If you are considering investing in SIP and wondering how much you need to invest as per your age and your earning years to build a Rs 5 crore retirement corpus, here are the calculations for you -
SIP Investment: Retirement planning, along with career building, is important for everyone. This is because in old age, when you will not have any source of income, this accumulated capital will help you in running your daily activities. Be it for your daily food or your medicines, etc., you will not need to ask anyone for financial support.
But do you know - proper planning for retirement not only makes you financially independent but can also help you accumulate a substantial corpus by your retirement age? One of the popular ways is investing money through a SIP, i.e., Systematic Investment Plan.
(Disclaimer: Our calculations are projections and not investment advice. Do your own due diligence or consult an expert for financial planning.)
What is SIP?
It is a method of investing in mutual funds, allowing investors to contribute a fixed sum regularly, like monthly or quarterly, rather than a lump sum.
Benefits of SIP
Some of the key benefits of investing in SIP include flexibility in investing, rupee cost averaging, and the power of compounding.
Understand the power of compounding
Compounding is a process of earning interest on interest. The power of compounding creates a snowball effect that helps your investments grow exponentially over time.
SIP investment
So, if you are considering investing in SIP and wondering how much and for how many years you need to invest in mutual funds, then here are the details of how much you need to invest in SIP as per your age and the remaining years of your job to build a corpus of around Rs 5 crore by the age of 60.
How to calculate the remaining years of employment?
For an average person, the retirement age in India is 60. So, to determine the remaining years of employment, subtract your current age from 60.
Remaining years of employment: Understand with examples
For instance, if you're 25 years old, then 60-25 = 35 years, that means you have 35 years left to work. Similarly, if you're 30, then 60-30 = 30 years, which means you have 30 years left, and if you're 35, then 60-35 = 25 years, i.e., you have 25 years remaining. These are the years you have to accumulate your retirement fund.
SIP investment according to your age
Now you need to know how much you need to invest in SIP each month according to your age. Assuming the annulised return rate will be 13 per cent.
SIP Calculator: Age-25 | Job Remaining-35 years
If you're 25 years old with 35 years remaining in your job career, then starting an SIP with just Rs 7,200 can help you build over Rs 5 crore.
Build Rs 5 crore in 35 years: Calculations
Continuing an SIP of Rs 7,200 per month for 35 years requires an investment of Rs 30,24,000. At a 13 per cent annualised return rate, the SIP calculation projects a long-term capital gain of Rs 4,74,73,141. Thus, at 60, your total sum, including the invested amount and capital gain, will be Rs 5,04,97,141.
SIP Calculator: Age-30 | Job Remaining-30 years
If you're 30 years old with 30 years remaining in your job career, then start an SIP of at least Rs 13,300 and continue it till the age of 60 i.e. 30 years.
Build Rs 5 crore in 30 years: Calculations
In 30 years, your total investment amounts will be Rs 47,88,000, yielding a long-term capital gain of Rs 4,52,40,203 at a 13 per cent rate. By 60, you'll possess Rs 5,00,28,203.
SIP Calculator: Age-35 | Job Remaining-25 years
If you are 35 years old and have only 25 years left for the job then you need to invest at least Rs 25,100 each month in SIP to build over Rs 5 crore wealth.
Build Rs 5 crore in 25 years: Calculations
In 25 years, your total investment will be Rs 75,30,000, yielding long-term capital gains of Rs 4,25,81,609. By 60, your total, including the invested amount and capital gain, will amount to Rs 5,01,11,609.