When you are between 50 and 60 years old, it is usually the time for retirement. Whether you work in a private job or a government job, you will retire. Even self-employed people may not be able to continue working regularly at this age. In such a situation, when you no longer have a regular income, how will you manage your daily expenses?
That’s why retirement planning is very important. The earlier you start investing, the bigger fund you can build for the future. One good way to save for retirement is through a Systematic Investment Plan (SIP).
If you invest ₹6,000 every month in a SIP for 25 years, you can earn around ₹1 lakh per month as income for the next 25 years after retirement. This money can help you meet your daily expenses and other needs after you stop working.
Start SIP First, Then Use SWP Later
To get monthly income after retirement, you need to build a big fund first. You can collect this fund by investing in a mutual fund through SIP, which means Systematic Investment Plan.
If you start SIP at the age of 30, you can keep investing till the age of 55. After that, you can move the money to SWP, which is a Systematic Withdrawal Plan. This will give you a fixed monthly income after retirement. You can also change the number of years for SIP and SWP based on your needs.
How Much Return You Can Get from SIP
Financial expert Dr. Ravi Singh says that SIP returns depend on the type of fund and the market. Normally, SIP gives returns between 6 percent and 18 percent every year.
If you choose a good equity fund, you may get 12 to 18 percent return. Midcap funds can give 14 to 17 percent, while debt funds are safer and give around 6 to 9 percent. On average, mutual fund SIPs are known to give around 12 percent return in the long run.
How You Can Collect 1 Crore Rupees in 25 Years
If you start SIP at the age of 30 and invest 6,000 rupees every month, then after 25 years, when you turn 55, you will have more than 1 crore rupees.
Out of this amount, 18 lakh rupees will be your own investment. The rest, which is more than 84 lakh rupees, will be the return or interest you earn. This is possible if the average return is 12 percent per year.
How You Can Get 1 Lakh Rupees Every Month After Retirement
When you turn 55, you can move your 1 crore rupees into an SWP. This means you put all your money into a plan that gives you a fixed amount every month.
If this plan gives you 12 percent return every year, then you will start getting 1 lakh rupees every month. This will continue for the next 25 years. In these 25 years, you will get a total of 3 crore rupees. Even after that, about 13.8 lakh rupees will still be left in your fund.