Retiring at 50 is a growing aspiration for many working professionals in India. Many have also achieved it with the help of discipline and early financial planning.
For most investors, early retirement means planning ahead. If one is planning to build an ambitious corpus such as Rs 10 crore, they may need to be more careful about their investment journey. Such high value corpus is achievable but requires favourable market conditions and clear strategy of investments.
Even if one wanted to take the Systematic Investment Plan (SIP) route in mutual funds, it would need a well structured plan. The remaining job is done by the power of compounding, which is more effective as time grows.
Monthly SIP Plan For 25 Years:
Monthly amount: Rs 25,000
Step-Up % (annual): 10%
Investment duration: 25 years
Expected rate of return: 12%
Invested amount: Rs 2,95,04,117
Estimated returns: Rs 7,73,84,534
Total value: Rs 10,68,88,652
The calculation shows that you will need to start with an SIP of Rs 25,000 per month and increase the contribution 10% each year to maximise your returns and reach the goal of Rs 10 crore.
If you skipped the annual increment step or reduced it to 5%, it could significantly impact the amount of investment and timeline needed to reach the goal.
Here's How:
Monthly amount: Rs 25,000
Step-Up % (annual): 5%
Investment duration: 28 years
Expected rate of return: 12%
Invested amount: Rs 1,75,20,774
Estimated returns: Rs 8,41,55,949
Total value: Rs 10,16,76,724
This shows that by reducing or eliminating the step-up technique of increasing the SIP periodically, you can risk achieving your goal. This method may not be as practical since not many people can afford Rs 25,000 SIP in their early careers.
This is why it is recommended to incorporate the step-up technique in your SIP plan to ensure that your investments keep pace with your income growth without adding financial stress.
Investors should also note that long-term investments require expert oversight. Consultations with certified professionals can help you understand your risk appetite and design a journey that is suited to your lifestyle.
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