As Indians reshape their retirement expectations, a strong financial planning to sustain their post-employment lifestyle is a growing trend. Factors like rising cost of living, inflation, etc are pushing people to adopt a plan that can build them long-term financial security and reduce future financial stress.
Retirement-focused strategies often include a mix of assets. Some popular tools are equities, mutual funds, fixed deposits, pension schemes, and gold. Choosing them depends on a number of factors such as the time that the investor has and how risk averse they are.
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But with someone having sufficient years ahead of them, including mutual fund SIPs in their portfolio can prove to be beneficial. This is because past trends have shown that mutual funds can deliver better than anticipated returns.
Financial experts note that even a modest SIP of Rs 2,000 invested consistently over many years can grow into a meaningful retirement corpus. For this, time plays a crucial role as the power of compounding strengthens with longer investment horizons. Advisors also say that a long-term approach helps investors better manage short-term market volatility.
Assuming someone wanted to invest Rs 2,000 in a SIP for different periods, here how much they could end up with:
Rs 2,000 SIP Over 15 Years:
SIP amount: Rs 2,000
Investment duration: 15 year
Expected rate of return: 12%
Invested amount: Rs 3,60,000
Estimated returns: Rs 6,49,151
Total value: Rs 10,09,151
As seen over 15 years, a Rs 2,000 SIP can generate over Rs 10 lakh corpus. Here, the investment value stands at nearly 35%, while the returns make up 65% of the corpus. But if someone were to continue this investment habit for 30 years, they could end up with significantly higher corpus due to compounding effects.
Rs 2,000 SIP Over 30 Years:
SIP amount: Rs 2,000
Investment duration: 30 year
Expected rate of return: 12%
Invested amount: Rs 7,20,000
Estimated returns: Rs 63,39,827
Total value: Rs 70,59,827
Here, the investment value stands at just 10%, while 90% comes from returns, making this a highly attractive investment option. People who are unable to start their investment journey earlier, may need to contribute higher amounts to make up for the lost time.
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Still, a long-term investment journey must always be discussed with an expert as mutual fund returns are never guaranteed. This is to ensure that it doesn’t cause you any financial stress later.
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