Every salaried employee and businessperson dreams of not having any financial worries after retirement. In today’s world of rising inflation, medical expenses, and expensive lifestyles, a retirement fund of ₹10 crore is considered sufficient for old age. But the question is, how much needs to be invested every month to build this fund, and what is the ideal age to start?
There’s a simple rule in the world of investing – the earlier you start, the lighter the burden. Delaying investments means you’ll have to invest more every month. This is why there’s a significant difference in the investment amount depending on age. Ankur Warikoo explained this in his YouTube video.
If you start investing at age 45, when will you reach ₹10 crore?
If a person starts investing at age 50 and wants to build a fund of ₹10 crore by age 60, they would need to invest approximately ₹3.6 lakh per month. This amount might be quite high for most people. On the other hand, if they start investing at age 45, they would need to invest approximately ₹1.47 lakh per month. This amount can also have a significant impact on the budget of an average middle-class family.
Also Read 0Build ₹1.2 Crore in 10 Years! A Smart Wealth Plan Even Middle-Class Families Can Follow
How much should one invest at the age of 35?
Starting to invest at the age of 40 gives an opportunity to relieve some financial stress, although it still requires a contribution of approximately ₹65,000 every month. Many people find this number overwhelming, especially people who have to help support their families and their children’s education and many other associated expenses. So when does a person reach an attractive and comfortable investment point?
For instance, someone starting to contribute to their retirement plan at age 35 would need a monthly investment of only ₹30,000 to reach ₹10 crores by age 60, and someone beginning to invest at age 30 would need to invest ₹14,000. In fact, this range (around ₹14,000 – ₹30,000 per month) seems affordable for the average young working person.
All this can easily be accomplished if a young person starts saving from age 20.
A person who begins saving at age 25 needs to put away only ₹6,000 a month to have a total of ₹10 crores by age 60! What surprises many is that beginning to save at age 20 means saving just ₹3,180 per month to reach ₹10 crores at age 60.
This shows just how effective compounding grows your money over time. That’s why financial planners continually stress the importance of getting young adults involved in long-term savings plans, through SIPs or other types of Investments, as soon as possible to create a financially secure retirement and the possibility for a lifelong retirement.