LIVE TV
ZEE Business
ZEE BUSINESS
हिंदी में पढ़ें  हिंदी में पढ़ें
Live TV
Live TV
  • Home
  • Budget 2021
  • Personal Finance
    • PPF
    • Mutual Funds
    • Income tax
    • EPFO
    • Income Tax Calculator
    • Personal Loan Calculator
    • Car Loan Calculator
    • Home Loan Calculator
    • SIP calculator
    • SWP Calculator
    • MF Returns Calculator
    • Lumpsum Calculator
  • India
    • Companies
    • Property
    • Startups
    • Uidai
  • Economy
    • Aviation
  • Tech
    • Mobiles
    • Apps
  • Auto
    • Cars
    • Bikes
  • Markets
    • Commodities
    • Currency
  • Jobs
  • Indian Railways
  • World
    • Economy
    • Politics
    • Markets
  • videos
  • photos
  • Authors
  • More ...
    • VIDEOS
    • PHOTOS
Read in App
Business News » Personal Finance News

How to retire at 40 with Rs 50 lakh! Explore Public Provident Fund+Post Office TD+RD+KVP

How to retire at 40: Everybody wants to enjoy a relaxed life or live on their own terms. Some millennials plan to retire early. So much so that retiring at 40 has become a goal for many. Is this really possible?

  • Twitter
  • Facebook
  • Linkedin
  • whatapp
  • View in App
How to retire at 40 with Rs 50 lakh! Explore Public Provident Fund+Post Office TD+RD+KVP
If you start working at the age of 25 and your annual salary is, say, Rs 6-7 lakh, it won't be very difficult to save Rs 16,000-17,000 per month (around Rs 2 lakh, or 1/3rd of your salary). Image: Pixabay
Written By: Rajeev Kumar
Updated: Sun, Oct 21, 2018
04:24 pm
New Delhi, ZeeBiz WebDesk
RELATED NEWS
PPF Calculator: Your Public Provident Fund account can make you crorepati! Follow this earn while you sleep strategy PPF Calculator: Your Public Provident Fund account can make you crorepati! Follow this earn while you sleep strategy
Money tip: This plan set to give more money than PPF, FD or even RD Money tip: This plan set to give more money than PPF, FD or even RD
PPF vs NPS: Which is better? Look at these calculations PPF vs NPS: Which is better? Look at these calculations
PPF vs NPS: Very detailed comparison for retirement fund - EXPLAINED PPF vs NPS: Very detailed comparison for retirement fund - EXPLAINED
Public Provident Fund (PPF) account limit double at Rs 3 lakh from Rs 1.5 lakh? Income tax return 80C cap at Rs 2.5 lakh? This Budget demand is full of joy! Public Provident Fund (PPF) account limit double at Rs 3 lakh from Rs 1.5 lakh? Income tax return 80C cap at Rs 2.5 lakh? This Budget demand is full of joy!

Everybody wants to enjoy a relaxed life or live on their own terms. Some millennials plan to retire early. So much so that retiring at 40 has become a goal for many. Is this really possible? Of course, it is, if you can ensure you have enough financial resources at your disposal at the age of 40, so that from then onwards you can pursue your own interests or hobbies, instead of being in a regular job. To make this happen, you will have to make a solid financial plan - that is not fraught with risk, and the return is guaranteed. 

Financial Planners will advise you to have a diverse portfolio, invest a good sum in Mutual Funds and stocks. Even as the returns would be likely higher, not all youths want to get into these. So, how about a simple plan, that has no risk and can help you easily retire at 40 with a fund of over Rs 50 lakh (5 million)?

Here is a suggested plan for a 25-year-old youth, who has just got into jobs, plans to play safe and not much interested in understanding the nitty-gritty of several financial products. 

If you start working at the age of 25 and your annual salary is, say, Rs 6-7 lakh, it won't be very difficult to save Rs 16,000-17,000 per month (around Rs 2 lakh, or 1/3rd of your salary). If you can manage to do that, your dream of retiring at 40 would certainly come true. 

You need to ensure that every year you manage to save Rs 2 lakh and invest that, as suggested below, in tax-saving instruments like PPF and Post Office 5-year Fixed Deposit. These are government-backed, easily available plans in all parts of the country. Now follow these steps: 

- First, open a Public Provident Fund (PPF) account with any bank of your choice. Invest Rs 1.5 lakh per annum in the PPF account for 15 years. At the current rate of 8.1 per cent interest, your annual disciplined investment would turn into a total fund of Rs 46,75,910.00 when you turn 40. 

The PPF investment and interests are not taxed. So every year, you will be able to save tax on Rs 1.5 lakh. As you will grow in your job, your salary would also grow with time. However, with increasing family responsibilities, the rise in your salary may not mean you can save more. Moreover, you will need to buy accident and health insurance policies to ensure your family is not in trouble when something bad happens to you. So let us stick to the Rs 2 lakh/year plan. 

- Divide the remaining Rs 50,000/year into 12 parts (around Rs 4166 each) and invest them in a bank Recurring Deposit (RD) account. Suppose you do it with HDFC Bank, you will have saved Rs 51,988 in a year. At the end of the year, invest this money in a Post Office five-year Time Deposit (TD) plan, which is offering 7.8% interest rate at present. At the end of five years, this Rs 51,988 will grow to Rs 76,498. At the end of the fifth year, you can reinvest this money in Kisan Vikas Patra (KVP) offered by Post Office. KVP is offering 7.7% interest rate at present. Your money would double in 112 months (9 years and 4 months). That means, at the end of 15-years, you will have an additional Rs 152,996. 

In the second year, you can again open an RD and invest Rs 4166/month. At the end of the year, put the entire savings in a five-year Post Office FD scheme. You will have another Rs 76,498 after five years. Suppose you repeat this exercise for four years, at the end of 10 years, you will have additional Rs 76,498+Rs 76,498+Rs 76,498+Rs 76,498 = Rs 303,992. 

After 10th year, you can stop investing this Rs 50000/year, and instead, use this amount for other purposes. 

By the time you reach 40, you would generate a total fund of Rs 152,996+Rs 303,992+Rs 46,75,910.00=Rs 5,132,898. While your total investment would be just Rs 50000x5+Rs 150,000x15 = 25 lakh. You will save tax, and remain worry-free about the final return. Out of Rs 5,132,898, you will not have to pay any tax for Rs 46 lakh!

Note: This is a simplistic explanation to show retirement at 40 with financial security is possible. You can explore more about financial products, or even consult a certified financial planner. 

*Official calculators provided by leading banks' websites have been used to arrive at the numbers, which may vary if you actually start investing at the age of 25.

Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.

TAGS:
Public Provident FundPost OfficeFixed DepositKisan Vikas Patra
RELATED NEWS
PPF Calculator: Your Public Provident Fund account can make you crorepati! Follow this earn while you sleep strategy PPF Calculator: Your Public Provident Fund account can make you crorepati! Follow this earn while you sleep strategy
Money tip: This plan set to give more money than PPF, FD or even RD Money tip: This plan set to give more money than PPF, FD or even RD
PPF vs NPS: Which is better? Look at these calculations PPF vs NPS: Which is better? Look at these calculations
PPF vs NPS: Very detailed comparison for retirement fund - EXPLAINED PPF vs NPS: Very detailed comparison for retirement fund - EXPLAINED
Public Provident Fund (PPF) account limit double at Rs 3 lakh from Rs 1.5 lakh? Income tax return 80C cap at Rs 2.5 lakh? This Budget demand is full of joy! Public Provident Fund (PPF) account limit double at Rs 3 lakh from Rs 1.5 lakh? Income tax return 80C cap at Rs 2.5 lakh? This Budget demand is full of joy!

LATEST NEWS

In chat with Anil Singhvi, analyst Vikas Sethi picks Phillips Carbon, L and T Finance as top buys for big gains

Vicky Kaushal is back to basics

Post office account holder? Important news on cash deposit, withdrawal - check new charges on savings, current and other accounts

Redmi Note 10, Redmi Note 10 Pro and Redmi Note 10 Pro Max launch today: Check timings, how to watch event live streaming, expected price and more

7th Pay Commission latest news: REVEALED! Salary may be affected by New Wage Code - know details

IRCTC Share price soars 7% today to over Rs 2000, makes investors extremely happy

SBI Share Price: Investors Alert! Maximise your profit, market experts have this advice for you

Earthquake of magnitude 6.2 strikes Greece – EMSC

Ashok Leyland share price: Sharekhan revises price target to Rs 151

Exclusive: Jet Airways deal will put country's airports at risk

  • India News
  • World News
  • Companies News
  • Market News
  • Personal Finance News
  • Technology News
  • Automobile News
  • Small Business News
  • Income Tax Calculator
  • Live TV
  • Videos
  • Photos
  • Author
  • Rss Feed
  • Advertise with us
  • Privacy Policy
  • Legal Disclaimer

Latest Trending Updates

  • EPFO
  • Budget 2020
  • Income Tax Return
  • Auto Expo 2020
  • Home Loan
  • Business News

Trending Topics

  • Income Tax
  • income Tax Calculator
  • 7th Pay Commission
  • Reserve Bank of India
  • GST
  • Latest Business News

Follow us on

zeebiz
zeebiz

Partner Sites

  • Zee News
  • Hindi News
  • Marathi News
  • Bengali News
  • Tamil News
  • Malayalam News
  • Gujarati News
  • Telugu News
  • Kannada News
  • DNA
  • WION
Copyright © Zee Media Corporation Ltd. All rights reserved