Retirement Planning by SIP, One-time Investments: Do you want to get Rs 50,000 monthly income from 40 years of age? Here's what should be your investment
Power of SIP & One-time Investment: Having a regular income early in life can help you get rid of some of your financial responsibilities. Such a regular amount may also help you focus more on career growth rather than aiming at creating a regular income source for retirement. But if you want to get Rs 50,000 monthly by 40 years, what can be your monthly SIP and one-time investment at different stages of life?
Power of SIP & One-time Investment: Who doesn't want a passive income source in their life? A type of income for which they don't need to work. An income that can be generated from the investment. But the investment process may differ from person to person for regular income. The investment will depend on when you require that amount and at what age you want to begin investing. The early start can give you an edge to generate a large amount of income. Know how different dynamics of regular income generation work and what your monthly SIP and lump sum amount may be to get Rs 50,000 monthly income from 40 years of age if your current age is 20, 25, or 30 years?
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(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning.)
Benefits of having passive income at early age
If one starts having a passive income early in their life, it may lead to financial stability and security, early retirement, financial freedom, wealth accumulation, etc.
Financial freedom at early age
Financial freedom is a stage in life where you have passive income sources to fund your daily expenses. Where your expenses don't depend on your income from your work. Having such freedom early in life can help one focus on larger career goals in life.
Less financial stress
When one has a passive income source, they are assured of a regular income. It will reduce psychological burden as the person doesn't have to think about their regular expenses. They may focus on their other financial goals. Less financial stress may also lead to mental stability post retirement.
Time for family, hobbies, and passion
A person who attains financial freedom early in life may devote more time to their family and can pursue their hobbies and passions with ease. Such a situation can help in their all-round development.
Passive income sources
One can have returns from their investments; they may create a rental property, invest in dividend-paying stocks, provide online advice on expert areas, and create royalty sources.
One-time investment for passive income from early age
One-time investment can create a substantial corpus in the long run. In the short term, a one-time market-linked investment may not give desired results as it may go through various market fluctuations.
Periodic investment for passive income
The advantage of periodic investment is that one can adjust these to their income cycle. One may make a daily, weekly, monthly, quarterly, half-yearly, or yearly investment if their income cycle is either of them. However, a periodic style of investment in a market-linked investment tool is suitable for the long term.
Calculations for the story
We will calculate the monthly SIP and one-time investment amount to get Rs 50,000 monthly income at 40 years of age for people with ages 20, 25, and 30. We are considering a 12 per cent pre-40 return, a 6 per cent post-40 return, and a 6 per cent inflation rate. The person will get an inflation-adjusted monthly amount of Rs 50,000 till the age of 70.
Monthly SIP investment to get Rs 50,000/month if you are 20
Estimated corpus required at 40= Rs 5,77,28,520
Estimated SIP investment required= Rs 57,778
One-time investment to get Rs 50,000/month if you are 20
Estimated one-time investment required= Rs 59,84,529
Monthly SIP investment to get Rs 50,000/month if you are 25
Estimated corpus required at 40= Rs 4,31,38,080
Estimated SIP investment required= Rs 85,494
One-time investment to get Rs 50,000/month if you are 25
Estimated one-time investment required= Rs 78,81,166
Monthly SIP investment to get Rs 50,000/month if you are 30
Estimated corpus required at 40= Rs 3,22,35,120
Estimated SIP investment required= Rs 1,38,742
One-time investment to get Rs 50,000/month if you are 30
Estimated one-time investment required= Rs 1,03,78,846