When you don’t have a regular income after retirement, how will you manage your daily expenses? This is something that worries everyone. Along with traditional retirement plans, you can also get regular income through SIP (Systematic Investment Plan) and SWP (Systematic Withdrawal Plan).
If you start investing from your first job, you can build a large amount of money over time. For example, if you start a SIP of ₹5,000 per month at the age of 30, then by the time you retire at 55, you can earn ₹85,000 every month for the next 26 years after retirement. Let’s understand how this works.
What Are SIP and SWP?
SIP (Systematic Investment Plan) and SWP (Systematic Withdrawal Plan) are two ways to invest in mutual funds. In SIP, you invest a small fixed amount every month. This helps you build a large fund over time. According to experts, SIP gives an average return of 12% per year. SWP is the opposite. You first invest a lump sum amount in a mutual fund. Then you get a fixed income every month, quarter, or year. For retirement planning, you first create a large fund using SIP, then shift that money to SWP to get regular income.
How a ₹5,000 Monthly SIP Can Give You ₹85,000 Per Month
If you start a SIP of ₹5,000 per month for 25 years, and you get an average return of 12% per year, your total fund will grow to ₹85,11,033. Out of this, your own investment will be ₹15,00,000, and the interest earned will be ₹70,11,033.
If you start this SIP at the age of 30, then by the time you turn 55, you will have this full amount saved.
Now, if you invest this ₹85,11,033 in mutual funds through SWP, and you again get a 12% annual return, you will receive a monthly income of ₹85,000 for the next 26 years.
In total, you will get ₹2,65,20,000 as regular income over those 26 years. Even after that, you will still have around ₹4,48,870 left in your fund.
