Nowadays, even in government jobs, there is no pension. EPFO or NPS also do not give enough money to live a good life in this time of high prices. That is why people start making a retirement fund from the beginning of their job. But many people do not know how much to save every month and where to save. If you invest in the right way and in the right place, you can make a retirement fund of ₹10 crore even with low income.
Plan Properly
Right now, prices are rising fast. Even then, everyone wants enough money to live well after retirement. Saving for retirement has become hard because of inflation. It is even harder for people who earn less. But it is not impossible to make a big retirement fund. By managing money in the right way and planning investment well, even people with small salaries can make a fund of many crores.
The 70:15:15 Formula
There is a formula for saving called the 70:15:15 formula. If you follow this, it makes you strong with money and helps in future planning. You do not have to cut your lifestyle for this. It is simple and useful.
Spend 70% of your monthly income on needs like rent, ration, and bills.
Keep 15% for emergency use.
Invest the last 15% in SIP of mutual funds.
In SIP, there is a model called Step-up SIP. In this model, you increase your SIP amount every year. It grows with your salary growth. If you raise your SIP by 10% every year, you can get very good results in 25 years.
Power of Compounding
The main reason this plan works is the power of compounding. Compounding means you earn interest on the interest. This makes your money grow faster with time. The earlier you start, the more benefit you get from compounding.
How to Make a Fund of ₹10 Crore
Even if someone earns only ₹25,000 a month, they can make a retirement fund of ₹10 crore. That person should start SIP with ₹3,750 every month. If the SIP is increased by 10% every year and continued for 25 years, then the fund can grow to about ₹10.68 crore. This is based on a 12% annual return. In this, the total money you put is ₹2.95 crore and the return earned is ₹7.73 crore.
