Do retirement planning this way, you will be owner of crores!
Retirement planning is not something that you think about in old age, but it is a process through which you can spend your old age properly. If you are 25 years old and you already have savings of 10 lakhs, then you have made a great start. Suppose you want to retire at the age of 55, then you have 30 years for your dream retirement. Let us tell you how you can make your retirement plan better.
The magic of compounding
If you invest your 10 lakhs in equity mutual funds or stocks for the next 30 years, where there is a possibility of getting an average annual return of 12 percent, then this amount can grow to 2.99 crores. In this, your original investment will be 10 lakhs, while you will get 2.89 crores in the form of interest.
Income after retirement
You can use this fund of 3 crores through Systematic Withdrawal Plan (SWP). If you withdraw 2.5 lakhs every month from the age of 55 to 70 years (15 years) and the rest of the money is kept in a liquid fund at a return of 7 percent, then you will be able to withdraw a total of 4.5 crores. Even after 15 years, you will be left with a fund of 28 lakhs and you will have earned a total interest of 1.88 crores.
Effect of inflation
Although after 30 years the purchasing power of 2.5 lakhs will be less than today, but this plan will give you a strong base. You can compensate for this by increasing your investment from time to time.
Invest from the age of 25
Actually, starting investing at the age of 25 gives you the full benefit of compounding. Apart from this, focus on equity. Equity gives good returns in the long term. Try to keep investing every month through SIP. Pay full attention to diversification. That is, invest in FD, gold and debt funds as well.
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