Often people feel that to accumulate crores of rupees for retirement, it is necessary to have a big salary. But financial experts believe that if investment is started on time and increased regularly, a large retirement fund can be created even with a small amount. Proper use of SIP (Systematic Investment Plan) and SWP (Systematic Withdrawal Plan) can help in achieving this goal.
How can a SIP of ₹1,000 become ₹1 crore?
Suppose a person at the age of 28 starts a SIP of only Rs 1,000 every month. If he increases his SIP by 10% every year and continues investing till the age of 60, while getting an average annual return of 12%, then after 32 years he can have a fund of around Rs 1.05 crore. The total investment of the investor during this period will be around Rs 24.13 lakh, while with the power of compounding he can get an estimated profit of around Rs 80.98 lakh.
Why is it important to increase SIP every year?
According to experts, the most important link of this strategy is to increase the SIP every year. Generally, the salary of employed people increases from time to time. In such a situation, if the SIP is increased in the same proportion, then a larger fund can be created without much financial pressure. In the long run, these small increases can make a difference of crores of rupees.
How to get regular income after retirement?
SWP (Systematic Withdrawal Plan) can be used for regular income after retirement. In this, the investor withdraws a fixed amount every month from his mutual fund, while the rest of the money remains invested and gets returns on it.
For example, if a person has a corpus of Rs 1.5 crore and invests it in a fund that gives an average annual return of 6%, then he can withdraw Rs 1 lakh every month for about 12 years. During this period his investment will also continue to earn returns.
Keep these things in mind before investing
However, 12% and 6% returns are only estimates and not guaranteed. Mutual funds are subject to market risks and returns depend on market movements. Therefore, investors should invest according to their age, risk appetite and financial needs. Also, it is important to keep inflation and changing needs in mind while planning for retirement. By regular investment, increasing SIP every year and using SWP properly after retirement, strong financial security can be achieved in the long run.
