Turning 40 often brings a moment of realisation that retirement is no longer a distant goal, but it requires serious attention. Many Indians in their 40s often focus on family, home loans, children's education and career growth, leaving retirement savings on the back burner.
At this stage of life, it is only fair that amassing wealth remains a key ambition for many people in India. However, it's never too late to start your investment journey.
Financial advisors and experts often suggest starting investments early to reap the benefits of the power of compounding. The investment tenure plays a crucial role in returns on investments, with a longer horizon often leading to substantial interest earnings. Even if you are starting your investment journey at the age of 40, you can still build a sizeable corpus with meticulous planning and smart money management.
If you are looking at building a sizeable corpus of Rs 2 crore for long-term financial stability or peaceful retirement, it can be achieved with regular investments. Although the target may seem overwhelming for some investors, consistency and informed financial decisions can turn this aspiration into a realistic goal.
When you start at 25, an extended investment tenure accelerates the growth of your funds. When you start at 40, your contributions have to do the heavy lifting. To hit Rs 2 crore by age 60 (a 20-year horizon), you need a disciplined strategy.
The mutual fund Systematic Investment Plans could be a suitable option to reach the target of Rs 2 crore corpus in about 20 years due to the power of compounding.
Assuming an average return of 12% per annum, let's see how you can build a corpus of Rs 1 crore through SIPs.
Building Rs 2 Crore Through SIPs
- Monthly investment: Rs 20,000
- Tenure: 20 years
- Total investment: Rs 48 lakh
- Expected rate of returns: 12%
- Estimated returns: Rs 1.52 crore
- Maturity corpus: Rs 2 crore
If Rs 20,000 feels steep right now, start with what you can and use the step-up SIP. Increasing your contribution by just 10–15% every year as your salary grows. It can drastically reduce the pressure on your current budget while keeping your investments aligned to your goals.
Starting at 40 requires discipline, but a higher earning potential makes it possible to achieve a corpus of Rs 2 crore. It is possible with consistent SIPs in quality equity funds, aggressive savings and smart allocations.
You can consult a Securities and Exchange Board of India (SEBI)-registered advisor for personalised suggestions, as markets involve risks and past performance may not be a true indicator of future results.
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