Retirement age in India is generally considered 60 and people make retirement-oriented savings keeping this age number in mind. However, one can retire earlier too, provided it has saved enough for the rest of its life. According to tax and investment experts, if someone wants to retire early, he or she will have to start investing as early as possible or say at least by 25 years of age. They went on to add that mutual fund SIP (systematic investment plan) is something that will help them accumulate whopping amount with small monthly investments. But, the investment has to be for long-term.
On possibility to accumulate ₹10 crore by age of 50; SEBI registered tax and investment expert Jitendra Solanki said, “To create ₹10 core retirement corpus by age of 50 requires financial discipline and investment planning at the early phase of one’s career is must. If a person wants to retire by 50 years of age, then he or she will have to start investing for retirement fund by 25 years of its age. At this age, one would be earning but the chances of having huge lumpsum amount for investment is little. So, mutual fund SIP would be the most suitable option for such investor as it helps developing ocean from an ice tip.”
Unveiling the SIP investment strategy that will help the investor meet its investment goal Kartik Jhaveri, Direct — Wealth Management at Transcend Consultants said, “Only SIP might not be able to meet such an ambitious investment goal as mutual fund SIP yields 12-15 per cent per annum in long-term. One should make some pun in its investment like annual step-up by 10 per cent. A person’s income is expected to grow annually and hence one should think of increasing one’s investments too. So, a 10 per cent annual step-up in monthly SIP will help the investor reach ₹10 crore target.” He said that in long-term investment, annual step-up in monthly SIP will help the investor maximise compounding benefit on one’s investment.
As per mutual fund SIP calculator, if a person starts SIP at the age of 25 assuming 12 per cent annual return and ₹10 crore investment goal in focus when he or she turns 50, then the monthly investment will be around ₹26,000 if the annual step-up rate will be 10 per cent.
Speaking on the SIP required for achieving ₹10 crore investment goal by 50 years of age Jitendra Solanki said, “Investing ₹26,000 at 25 years of age might not be easy. But, if someone is dead adamant to achieve ₹10 crore investment goal when he or she turns 50, then there requires some financial discipline and commitment to the investment goal. In that case, my advice to the investor is to increase one’s annual step-up rate by 15 per cent, instead of starting with whopping ₹26,000 monthly SIP.”
Going with Solanki’s views, if an investor starts an SIP at the age of 25 keeping investment goal of ₹10 crore assuming 12 per cent annual return but annual-step-up rate is 15 per cent, then the monthly SIP of ₹14,750 will enable the investor to get ₹10,02,55,880 or ₹10.02 crore.
So, it’s advisable for the investor to keep the annual step-up rate as higher as it’s possible for him or her as it curtails monthly investments to a larger extent.
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