Why Start Retirement Planning As Early As Possible?
This is a very significant question for you if you just have started your career because many people fail to plan their retirement at the right time. Normally what happens is, during their 20s people feel it too early to plan their retirement, and later during 40s they realise that it is too late. Every individual wishes to live a financially sound retirement which many fail to achieve because of planning at a later age.
People face more difficulties in saving income for retirement after they become older as the load of saving money increases. So, it is better to start early for easy and effective planning and investment.
Let’s know how much you can earn for your retirement if you start investing in the mutual fund SIP. Here are three different cases defining the implications of saving and investing at different ages:
Starting at the Age of 25 : The key point of planning a retirement is to have sufficient finance to survive the life comfortably at the old age. If you are starting your investment plan through SIP which is the best way of growing a corpus in a longer tenure, you can make your retired age financially established. You can initiate your investments with just Rs. 1000 per month. Suppose the average compounded rate of return on your investment is 15%, and you invest for a period of 35 years as the expected retirement age is 60. The total invested amount at the age of 60 will be Rs. 4,20,000 (1000*12*35) and the expected returns will be around Rs. 1,48,60,645. Isn’t it amazing? With just a small investment of Rs. 1000 per month you can be a ‘Crorepati’ in the future.
Starting at the Age of 35 : If you are initiating at 35, you are already ten years late. Now, you will have to save little more for a financially prosperous retirement as your money will get only 25 years to grow until your retirement age. If you save Rs. 2000 per month, your total investment after 25 years will be Rs. 6,00,000, and at the same compounded rate, i.e., 15%, the total yield will be around Rs. 65,68,147. You can now see the difference in the earnings which is just the half of what you would have earned if you had started ten years earlier.
Starting at the Age of 45 : Many people fail to plan their retirement at an early age because of one or the other reasons. But once they understand that they have to save monies to meet their future financial needs, they initiate investing in the retirement plans. Yes, it is true that if you start so late then there will be a big bundle of money which you will lose. Furthermore, you will have to save more amount of money each month to reach your goal. Suppose you save Rs. 5000 per month, your investment will have 15 years only to grow until your retired age. At the age of 60, your total investment will be Rs. 9,00,000 upon which the total yield at the rate of 15% will be around Rs. 33,84,315. This is quite a huge difference if we compare the amount fetched in the first case above, and the burden of investing is also more. But, if you can manage to invest a huge corpus in equities at a later age, you can earn exceptional returns.
Now, you must have understood that how worthwhile it is to start investment planning at an initial stage of life. If you start planning for your future financial goals at a young age then you can earn incredible returns and high growth. Furthermore, there are several benefits which can be availed easily which include:
- Time Allows Your Money to Grow Manifold : Every investor knows that equity investments generate greater income but in the longer period of time. Therefore, if you begin your financial planning for retirement at a young age, you will have a long period of time to let your money grow into wealth.
- Compound Interest Makes a Huge Difference : The power of compounding can fetch you unbelievable returns as it has amazing potential that can convert your small investment into a whopping sum of money in the long run. The best way to get benefits of this feature is to start at the earliest as compounding works tremendously in the longer tenure.
- Your Spending Habits Will Improve : Earlier you start investing money to meet your future financial needs, sooner you will learn the importance of savings. This further helps you to improve your spending habits by cutting down the unnecessary expenses.
So think, process, and react like a savvy, get the plan ready and start investing in order to achieve excellent returns. An early start will always let you earn exceptional returns in the long run. MySIPonline has various schemes of different AMCs which are specially designed to achieve a prosperous retirement. You can also select the best one to gain maximum benefits.
- LTCG Tax Is Not As Negative As it Seems; Here’s Why?45594 min read Jan 01, 1970
- Sensex Plunges Over 1000 Points; Should You Buy or Hold Your Investments for Correction?46353 min read Jan 01, 1970
- Sensex Dives Nearly 840 Points: Things to Consider and Experts’ Take47373 min read Jan 01, 1970