Mutual Funds Investment: How To Build Rs 2 Crore Retirement Corpus? Check Your Monthly SIP

It's never too early to start your investment journey. In fact if you start building your nest egg earlier in your career, you could even plan an early retirement. The power of compounding helps build a sizeable corpus fund even if you invest a modest amount every month. Retirement planning should be an integral part of your investments.

Building a retirement corpus is a crucial aspect for financial security due to the rising cost of living. Retirement funds are designed to support your lifestyle and long-term goals during the post-retirement years, providing steady income when regular earnings stop.

Retirement corpus goals can vary based on individual targets and risk appetite. People adopt different investment strategies to achieve them. One of the most popular is mutual funds due to their potential for higher returns over the long term.

These market-linked funds have proven to be effective for retirement planning as they provide higher returns compared to traditional savings instruments. While their market-linked nature makes them riskier, mutual funds generally offer higher returns.

For instance, if someone wants to build a Rs 2-crore retirement corpus, mutual funds can help them achieve this goal faster than traditional tools like fixed deposits. This is possible by implementing an effective asset allocation strategy by planning an early start and staying invested for a longer duration.  A mutual fund systematic investment (SIP) plan can help build a retirement corpus through small monthly investments.

Monthly SIP Amount Needed For Rs 2 Crore Corpus

Assuming an annual return of 12% and investment horizon of 35 years (an individual starts investing at age 25), here's how the investment will grow:

Tenure: 35 years

Target: Rs 2 crore

Required monthly SIP: Rs 3,700

Total investment will amount to: Rs 15.54 lakh

Estimated returns: Rs 1.88 crore

Final corpus value: Rs 2.04 crore

It is important to note that this corpus value will attract taxes. Also, this value is not adjusted for inflation. Hence, investors are advised to decide the investment amount as per their financial needs.  

For instance, keeping a higher corpus target of Rs 2.5 crore at the end of 35 years will require an increased SIP. This scenario ensures that your final corpus value remains well above the target of Rs 2 crore even after tax cuts.

Monthly SIP: Rs 4,500

Tenure: 35 years

Investment: Rs 18.9 lakh

Estimated returns: Rs 2.29 crore

Final corpus: Rs 2.48 crore

If one wants to achieve the corpus target before hitting their retirement age, they will need to maintain higher financial discipline by increasing their SIP.

For instance, for accumulating Rs 2 crore in 25 years, an investor needs to invest:

Target: Rs 2 crore

Tenure: 25 years

Monthly SIP: Rs 12,000

Investment amount: Rs 36 lakh

Estimated returns: Rs 1.68 crore

Final corpus: Rs 2.04 crore

Investors should note that mutual fund investments are subject to high risk and volatility in the stock markets. Hence, it is recommended to evaluate all risk factors as well as your financial goals, or consult a certified financial advisor, before making investment decisions.