Stories
How to accumulate Rs. 1 crore with a salary of Rs. 25,000 through smart saving
- •Financial experts emphasize the importance of starting early with a systematic investment plan for retirement.
- •An individual earning Rs. 25,000 per month can invest Rs. 4,000 monthly in mutual funds yielding 12 percent returns to reach Rs. 1 crore in slightly over 28 years.
- •Investing Rs. 10,000 monthly, which is 40 percent of the salary, reduces the time to accumulate Rs. 1 crore down to 20 years.
- •Post-retirement financial security can also be enhanced through health insurance policies and alternative income sources like freelancing.
- •Avoiding unnecessary expenses and debt burdens helps in achieving long-term financial goals much faster.
Key Questions Answered
For someone earning a monthly salary of Rs. 25,000, investing Rs. 4,000 per month in a mutual fund yielding a 12% annual return takes a little over 28 years to reach Rs. 1 crore. Alternatively, investing Rs. 5,000 monthly takes over 26 years, while investing Rs. 7,500 or Rs. 10,000 monthly reduces the timeline to 23 years and 20 years respectively.
Individuals who start investing late should focus heavily on maintaining good health, securing a health insurance policy to manage post-retirement medical expenses, and controlling unnecessary lifestyle expenses, new debts, and EMI burdens. Additionally, they should look for part-time jobs, consultancy work, or freelancing opportunities based on their skills to generate additional income after retirement.
Starting a SIP at age 25 requires about Rs. 15,396 per month to build a Rs. 10 crore corpus by age 60, assuming a 12 percent annual return. In contrast, delaying the start until age 40 requires a much larger monthly investment of over Rs. 1,00,085 to achieve the same target.
