In today’s time, becoming a millionaire is no longer just a matter of big business or inheritance. If the right strategy is adopted at the right time, even a small monthly investment can create a huge corpus in the long run. This is why Systematic Investment Plan (SIP) has now become the most reliable method of wealth creation for millions of Indians. Recent data shows that investors are continuously investing money in SIP despite market fluctuations. The question is, if your goal is to create a retirement fund of ₹1 crore by the age of 60, how much should you invest every month starting at different ages?
15% return estimate
The calculation here has been done on the basis of 15% annual average return. Many equity mutual fund categories have given these levels of returns over the long term. Although this is just an estimate, actual returns will depend on the market.
If you start at age 25
- Investment period: 35 years
- Monthly SIP: Around ₹1,000
If a 25-year-old investor invests just ₹1000 every month and continues for 35 years, a corpus of around ₹1.14 crore can be created by the age of 60. Time is the biggest weapon here. The magic of compounding works wonders in the long run.
On starting in 30
- Investment period: 30 years
- Monthly SIP: Around ₹2000
A delay of just 5 years forces you to invest double. At the age of 30, a monthly investment of ₹2,000 can create a corpus of around ₹1.12 crore. This means postponing investment can be costly.
Onset at age 40
- Investment period: 20 years
- Monthly SIP: Around ₹7500
Now the difference is clearly visible. As the time period decreases, the monthly investment increases rapidly. To achieve the target of ₹1 crore at the age of 40, one will have to invest around ₹7,500 every month.
Late start?
If one starts at age 45 and increases a ₹10,000 monthly SIP by 10% every year, a corpus of around ₹1 crore can be created even in 15 years. That means discipline and regular growth can compensate for the shortcomings of late start to a great extent.
Time is the real power, not the market.
Creating a fund of ₹1 crore is possible not by timing the market, but by staying in the market for a long time. At the age of 25, ₹1000 is enough, but to achieve the same goal at 40, ₹7,500 is required.
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