Starting SIP At 30? Here's How Much Rs 5,000 And Rs 10,000 Monthly Can Make For Retirement

Starting an SIP (Systematic Investment Plan) in mutual funds is one of the effective strategies to diversify your investment portfolio and build wealth in the long run. Retirement planning needs consistent investment over the years and starting early could help build a sizable corpus. If you are looking forward to building a retirement fund with regular investments every month, an SIP could be a suitable choice.

Starting early is the key to financial security in your golden years. A longer tenure of investment helps you to enjoy the benefits of the compounding interest rates. At the age of 30, one starts to make a decent living after a few years of initial career journey. Hence, this could be a great time to begin investing in mutual funds to build wealth through small but consistent investments.

Assuming the retirement age of 60 years, an investor putting money in an SIP scheme will have at least 30 years to build the retirement corpus. With consistent investment, you can build a sizable corpus and become a crorepati by the time you retire.

Let’s understand this through an example of how your wealth will accumulate over the years if you invest only Rs 5,000 and Rs 10,000 every month.

Assuming an annual interest rate of 12% in a mutual fund SIP, if you invest Rs 5,000 monthly for 30 years, the total amount will grow into more than Rs 1.5 crore. Here’s a detailed breakup:

Total investment amount: Rs 18,00,000

Estimated returns generated: Rs 1.36 crore

Final corpus value: Rs 1.54 crore

Similarly, how much of a difference can a Rs 10,000 monthly SIP make at 12% annual return? Let us see:

Total investment amount: Rs 36,00,000

Estimated returns: Rs 2.72 crore

Final corpus value: Rs 3.08 crore

This means that increasing the SIP amount by another Rs 5,000 can double the retirement corpus value in a period of 30 years. However, the returns may fluctuate depending on market conditions.

Understanding how much one needs for their retirement corpus depends on specific financial goals. However, a general rule is to target a corpus that is 30 times the annual expenses before retirement. This means that someone with an annual expense of Rs 12 lakh before retirement should target at least Rs 3.6 crore, according to experts.

To reach this goal, an effective mutual fund investment strategy is to increase your SIP contribution by 10% every year, as suggested by many financial experts. While this may seem like a small step, this gradual increase can make a big difference to the overall corpus through the power of compounding.