Retirement Plans: Retirement marks the beginning of a new life for everyone. While leaving the day-to-day job brings peace, the question everyone faces is how to manage their expenses. Given rising inflation and longer lifespans, it’s crucial to have a stable source of income after retirement. If you start investing early, you’ll receive a regular monthly income even after retirement. This will solve all your problems. Now, you don’t need to worry. In this article, we’ll explain an investment tool that will ensure a comfortable retirement.
Learn about SIP and SWP
SIP, or Systematic Investment Plan, is a method in which you invest a fixed amount every month in mutual funds. Despite the small investment amount, it can build a substantial corpus over the long term through compounding. On average, mutual funds generate 12 percent annual returns.
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Systematic Withdrawal Plan (SWP) is a method by which you can withdraw a fixed amount from your accumulated funds every month or quarter. After retirement, when you leave work life, the funds created through SIP can be converted into SWP to create a stable source of monthly income.
A corpus of 85 lakhs in 25 years
If you start a SIP of ₹5,000 every month from the age of 30 and continue it for 25 years, then based on a 12 percent annual return, you will have a corpus of ₹85,11,033. Your total investment amount will be ₹15 lakh, while ₹70,11,033 will be earned as interest. This means your capital will grow almost sixfold.
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You’ll earn Rs 85,000 per month
Now, if you invest this Rs 85 lakh in an SWP after retirement and run it at a 12% annual return, you can receive a regular income of around Rs 85,000 per month for the next 26 years. Over this period, you could earn a total income of approximately Rs 2.65 crore. This will ensure a comfortable retirement.