Synopsis– Are you planning for early retirement, maybe by age 54? With a consistent SIP and a smart strategy, you can create a significant retirement fund over time.
These days, many professionals dream of retiring early to pursue their passions or travel the world. But achieving this lifestyle requires a reliable source of income, right? In a recent post on X (formerly Twitter), CA Nitin Kaushik highlighted how a disciplined SIP approach can help build a retirement corpus of ₹1.8 crore to ₹2.2 crore.
Investment Plan Overview
- Current Age: 34 years
- Retirement Age: 54 years
- Investment Tenure: 20 years
- SIP Amount: ₹16,000 per month
- Annual Step-Up: 6%
- Expected Return: 10 to 11% per year
How the Plan Works
By starting with an SIP of ₹16,000 per month and increasing it by 6% every year, you can gradually increase your contributions. This small contribution can make a huge difference in the long term. With an average return of 10 to 11%, you total investment of around ₹50 to 55 lakh over 20 years could grow into a fund of ₹1.8 to 2.2 crore by age 54.
Also read: Specialized Investment Funds (SIFs): How They’re Reshaping India’s Mutual Fund Landscape
What Happens After Retirement?
Once you retire at the age of 54, you can set up a Systematic Withdrawal Plan (SWP) to generate regular monthly income. Assuming a 5% annual withdrawal rate, your retirement fund of ₹1.8 crore to ₹2.2 crore can provide a monthly income between ₹75,000 and ₹90,000. This amount should comfortably cover most household expenses and help maintain my lifestyle, especially if major loans are paid off by then.
Why This Strategy Works
- Power of Compounding: Long-term investing in equity mutual funds helps your money grow significantly over time.
- Step-Up Advantage: A 6% annual increase in SIP helps tackle inflation and greatly boosts your final fund.
- Systematic Discipline: Investing regularly for 20 years smooths out market ups and downs and builds wealth steadily.
- Flexible Withdrawals: SWP gives you control over how much you withdraw each month, without needing to redeem the entire investment.
Pro Tip: Stay Consistent even if markets fluctuate, don’t stop your SIPs. Consistency is key to long-term wealth creation. Also, review your mutual fund portfolio timely to ensure that it matches your risk profile and retirement goals.
Final Thoughts
Starting early, gradually increasing your SIP, and staying invested for the long term can give you a healthy retirement fund. After just 2 decades, you could enjoy financial independence with a steady income per month. This shows that if you plan properly then a disciplined investing truly pays off.
Written by Vijetha V Gosi
