It will be easier for you to accumulate a sizable corpus the earlier you begin saving money for retirement. To survive comfortably in retirement, everyone needs to have a sufficient amount of money. Planning your investments is essential to ensuring that you will have enough funds in retirement to cover your expenses. It’s crucial to periodically assess your investment portfolio and make the required modifications to match your risk appetite, return expectations, and inflation. You can also study investment opportunities in items like gold, a small savings plan, shares, index funds, etc., depending on your age, risk tolerance, investment size, and expected return. The best thing you can do if you want to retire with more money is to start early.
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For people up to 30 years:
When you are in your 20s, you have less financial responsibility and a greater risk appetite. So you can aim for a larger return on investment while taking a higher risk. If you are now 25 years old, you still have 35 years to generate significant wealth. Even with an investment of just Rs. 1,550 per month and an average portfolio return of 12 percent, it will need 35 years for you to amass a corpus of about Rs. 1 crore.
You can initiate your savings by investing Rs 1000 in an equity mutual fund SIP and diversify by depositing Rs 500 each month in mid-cap and large-cap funds. You can contribute the final Rs. 550 to the debt fund. You can gradually switch your fund allocation from equity to debt mutual funds as you get older to meet changes in your risk appetite.
For people between 30 to 45 years:
Most people in their 30s to 45s are established in their careers and have a reliable source of income. They also become financially very responsible. They have roughly 25 years (if investing starts at age 35) to reach retirement. Their risk appetite eventually decreases as their financial responsibilities increase. Therefore, if people in this age bracket are willing to accept an average return of 10 percent per year in line with their risk appetite, they must invest Rs. 7500 every month for the next 25 years to amass a corpus of Rs 1 crore.
They can allocate 50 percent of the investment to debt funds and the remaining 50 percent to equity SIPs made up of large and midcap funds. As people get older, they can gradually switch their fund allocation from equity to debt funds to reflect their changing risk appetite.
For people between 45 to 55 years:
Between the ages of 45 and 55, the level of risk appetite considerably lowers the return on investment. Given this age range, the investor will be comfortable taking a risk that can result in an annual return of about 8 percent. If the person is 50 years old, he will need to invest roughly Rs 54000 each month at an 8 percent annual return rate to build a capital of Rs 1 crore in the remaining 10 years until retirement.
Investors between the ages of 45 and 55 should diversify their portfolios in the suitable bank RDs that allow extra rates of interest in addition to setting up a SIP in debt mutual funds to guarantee yearly returns of at least 8 percent.
