Retirement Planning: Grow Your Wealth with a ₹5 Crore Fund Through SIP Investments

Nobody can become a millionaire in a single day, and there’s no magical scheme that can provide such large sums of money to individuals. Every individual wishes that while they may not become millionaires in their lifetime, they should have a fund worth millions by the time of their retirement so that they can comfortably spend the rest of their life. Therefore, one way to build a substantial corpus is through a Systematic Investment Plan (SIP).

Today, you will learn how to accumulate a corpus of 5 crores rupees until retirement through SIP.

• How beneficial is it to invest in SIP?
• How much should one invest in SIP at different ages to accumulate a fund of 5 crores rupees until retirement?
• At the age of 25, 30, 35, and 40, how much should one invest in SIP?

So let’s start planning for SIP as soon as possible. Because even delaying by a year in investment can affect your wealth. And if you start it at the right time, you will reap the benefits of its discipline.

Accumulating a Fund of Rs. 5 Crores through SIP Starting at the Age of 25

According to financial expert Jiten Solanki, if you start investing in SIP at the age of 25, by the time you reach your retirement age, which is typically 60 years, you can accumulate a fund of more than Rs. 5 crores. This is achievable while keeping any market-related risks in check.

Monthly Investment Required for SIP at the Age of 30

If you are 30 or 35 years old, your monthly investment in SIP will increase. For example, understand the calculation of SIP starting at the age of 30 as follows:

• Monthly Investment: Rs. 15,000
• Average Interest Rate: 12%
• Total Investment Duration: 30 years
• Total Investment: Rs. 54,00,000
• Estimated Returns: Rs. 4,75,48,707
• Total Returns: Rs. 5,29,48,707

If you are 35 years old, to accumulate a fund of 5 crores rupees for retirement, you will need to invest Rs. 27,000 monthly in SIP.

Understanding the Calculation of Returns

Here’s how you can understand the calculation:

• Monthly Investment: Rs. 27,000
• Annual Interest Rate: 12%
• Total Investment: Rs. 81,00,000
• Estimated Returns: Rs. 4,31,36,147
• Total Returns after 25 years of investment: Rs. 5,12,36,147

If you are 40 years old and aiming to accumulate a fund of 5 crores rupees through SIP, you will need to invest a certain amount monthly. If you start SIP at the age of 40, you will need to invest Rs. 33,000 monthly without any breaks until retirement, which is typically 20 years. If you estimate an average return of 15% during this period, the calculation of returns can be understood as follows:

• Total Investment: Rs. 79,20,000
• Estimated Returns: Rs. 4,21,06,514
• Total Returns after 20 years of investment: Rs. 5,00,26,514

As per financial expert Jitendra Solanki, if you invest in mutual funds through SIP, which is linked to the market, your money might receive lower returns compared to direct market investments. However, mutual funds are managed by fund managers and hence, the risk of losing money is significantly lower, and over a longer period, the risk of losing money through SIP decreases even more.

Invest in the Safest Index Funds

Among various types of SIPs, index funds are considered the safest. They typically include only those shares listed in the Nifty-50 index. These shares adhere to the regulations set by SEBI and offer investors a good return potential. Hence, they are included in the Nifty-50 index list. Another example is the BSE-30 index, which includes 30 shares and is listed alongside the Nifty-50 index, which consists of 50 shares.

SIP Investment: Less Risk, More Convenience

In reality, SIP stands out for its convenience, long-term benefits, and regular savings, making it suitable for the average person. The returns you receive depend on the mutual fund you choose. While SIP investments don’t guarantee returns like Fixed Deposits (FDs), the trend over the last 10 years shows that it doesn’t entail high risks either.

Start Investing From a Young Age

If you aim to earn money quickly, it’s advisable to start investing from a young age. This enables you to potentially reap better returns over the long term. Investing early helps you understand the power of compounding, which requires you to increase your investments gradually over time to maximize returns.

Consistent and Timely Investing

Whether it’s SIP or any other form of investment, the most crucial aspect is to invest regularly and consistently. This means allocating a fixed amount of money at regular intervals, typically monthly, towards your investment. It’s essential to establish a savings plan to ensure this consistency.

Market Timing is Not Recommended

Attempting to time the market is generally not advisable, as it’s challenging to predict market movements accurately. Even though the market may be performing well, it doesn’t guarantee future success. Many people tend to invest when the market is booming, hoping to make quick profits. However, this strategy can backfire, especially during market downturns.

In such situations, attempting to capitalize on short-term gains can result in losses. If you choose to invest for the long term, you are more likely to benefit from the overall growth of the market, despite short-term fluctuations.

Increase Your SIP Amount as Your Income Rises

As your income grows, consider increasing your SIP (Systematic Investment Plan) amount accordingly. This strategy allows you to maximize your investment potential over time. By investing more as your income increases, you can potentially achieve higher returns and build wealth more effectively.

Maintain a Diversified Portfolio

As an investor, it’s advisable to never put all your eggs in one basket. In any investment scenario, diversification is key. This means spreading your investments across various asset classes such as gold, silver, equities, debt funds, real estate, and mutual funds. Diversifying your portfolio helps mitigate risks associated with any one sector experiencing a downturn, as other sectors can potentially offset losses.

Invest Wisely at the Right Time and Right Place

It is crucial to invest your money at the right time and in the right place. Before investing in any sector, it’s important to assess both its historical performance and current status. You should also consider when it’s the right time for you personally to invest your money.

Investing at the right time means taking into account market trends, economic conditions, and individual financial goals. Additionally, understanding your risk tolerance and investment horizon is essential in determining when and where to invest your funds.