Tips To Build A Rs 5 Crore Retirement Corpus

Although most people retire at 60, retirement planning should start early because the pressure would be much greater if delayed to ensure a robust corpus fund that lasts longer.

Versha Jain
September 18, 2023
Necessary Tips To Build A Corpus

Necessary Tips To Build A Corpus

Most people plan to buy a house, a car and other essential assets as soon as they start earning, but they often tend to postpone or ignore retirement savings amid their priorities. Although there is nothing wrong in prioritising what they believe should come first, they should understand that the longer the delay, the harder it will get to build a corpus fund that lasts longer in old age.


So, the lesson is to start saving early in your career to expect good investment returns. Every delayed year in retirement planning can significantly impact the final corpus fund. Hence, one should start early to take the best benefit of compounding. For example, suppose a 35-year-old wants to build a corpus of Rs 5 crore by 60, how much should the person save? 

Abhijit Talukdar, a Sebi-registered investment advisor, says, “A 35-year-old would need to invest Rs 26,612/pm for the next 25 years to build a corpus of Rs 5 crore by the age of 60, assuming a 12 per cent annual rate of return and monthly compounding.” 

But suppose you delay it by five years; in that case, you will need to invest a significant sum every month to build the same corpus, which may not always be possible as expenses may increase. 

Talukdar says, “If the same person starts investing at 40, she would need to invest Rs 50,543 per month for the next 20 years to build Rs 5 crore by 60—almost twice what is required if she had started investing five years earlier. This illustrates how important it is to start investing early.” 

Typically, the responsibilities increase when one enters the late 30s and 40s. It may become more challenging to prioritise retirement planning. However, for any retirement planning or saving, one should factor in risk tolerance, return expectations, inflation, life expectancy, etc.

How To Build A Required Corpus? 

Start Early: Start saving and investing early to build a sizable corpus fund for retirement. The idea is to invest in small amounts regularly to build a strong corpus with the help of compounding. This ensures that you do not face extra pressure when meeting other tasks. If you start at 35, you will have 25 years to invest before retiring at 60. Based on your goal, expected time horizon and risk appetite, choose the investment options accordingly. 

Consistency: Says Talukdar, “The most important point when investing for the long term is to stay invested regardless of whether the markets are up or down. Since this is easier said than done, retail investors should use the SIP option offered by mutual funds to ensure disciplined investing. Some mutual funds even offer a Smart SIP option, where the monthly investment amount is increased when valuations are cheap and decreased when the valuations are expensive.” He stresses that consistent investment until retirement is vital. 

Diversify Investments: Many investment options are available, from guaranteed income instruments to riskier options. For guaranteed returns, the options could be fixed deposits, bonds, sovereign gold bonds (SGBs), public provident funds (PPF), small saving schemes, etc. Riskier options could be mutual funds, exchange-traded funds (ETFs), stocks, etc. Adds Talukdar, “For building a retirement corpus which is at least 20 years away, equity is the best asset class for investments.” Although there is no guarantee in equities, they can generate better returns than the guaranteed instruments due to their longer time horizon.  

 Meanwhile, if you have sufficient time to build your retirement corpus, plan your expenses and investments to meet your immediate and short-term goals by investing in guaranteed income avenues like fixed deposits and equities for long-term purposes, at the same time, one should regularly review their wants and needs to ensure they do not come in the way of your retirement plan. 

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