The retirement age in India is generally considered 60 and people make retirement-oriented savings keeping this age number in mind. However, there is no hard or fast rule for that, if you want to retire early, you can do that also. But for that, you have to start investing as early as possible or say at least by 25 years of age. Financial planners suggest that mutual fund monthly SIP (systematic investment plan) is something that can help people accumulate whopping amounts. But, the investment has to be for the long-term.
Investing in an equity mutual fund scheme via a SIP is the best way to achieve your long-term goals. It has the potential to offer superior returns than other asset classes. It may also help you to beat Inflation which is essential to achieve long-term goals. They also enjoy favourable taxation.
As per the mutual fund SIP calculator, if a person starts SIP at the age of 25 assuming a 12 per cent annual return and ₹12.86 crore investment goal in focus when he or she turns 60, then the monthly investment will be around ₹20,000.
Why do you need to plan your finances for retirement?
It is easy to cover your expenses as long as you are earning your monthly salary. But post-retirement, you need to have enough money set aside to live the rest of your life and maintain a good lifestyle. You need money to cover your daily needs, medical expenses and fight uncertainties.
For instance, you are 42 and plan to retire at 60 with Rs 2 crore for your retirement and expect your investments to earn 10%; you will need to invest Rs 33,027 from now. Well, if you cannot afford to invest so much amount, and these figures may seem daunting and high, there is always an option of investing with a smaller sum through SIP (systematic investment plan) and increase it with each passing year through a SIP top-up. But that should not deter you from saving and investing. Start with a small sum and keep increasing this regular investment over time.
So, it’s better to plan early for your retirement, and not wait for your 40s to start investing for the same.
Disclaimer: We advise users to check with certified experts before taking any investment decisions.
MF investors won’t be able to redeem money if…
Why women must take care of their finances
Cardless ATM: Finally you can withdraw cash without cards