Most people think about retirement planning at a very old age. But if you want to create a good and big corpus, then you should think about it in the initial stages of getting a job.
Personal Finance: Most people think about retirement planning at a very old age. But if you want to create a good and big corpus, then you should think about it in the initial stages of getting a job. This is because in retirement planning, a big corpus is accumulated with the help of compounding. It is worth noting here that the real power of compounding is seen when investments are made for a long time. Let us tell you today such a tip related to SIP, in which the trick of Triple 5 works.
First of all, let’s assume some standards, so that it is easy to understand this trick. Let’s assume that you are currently 25 years old and you are depositing Rs 1000 every month under SIP. Here we are also assuming that you will get an average return of about 11-12 percent on your investment till you retire. Let us now understand how the Triple 5 formula works.
What is the Triple 5 formula?
The first 5 in the Triple 5 formula means retiring five years earlier. The second 5 means that for this you will have to increase your SIP by 5 percent every year. The third 5 means that if you invest continuously like this, then by the age of 55, you will have a corpus of Rs 5 crore. That is, a small change in the SIP and you can retire before time.
Let’s understand this with an example
Let’s assume that you do a SIP of Rs 1000 every month (12000 annually) and keep increasing it by 5% every year, on which you are getting an average return of 11%. By doing this, in 30 years i.e. till the age of 55, your total investment will be around Rs 95.67 lakh. At the same time, due to the power of compounding, you will get an interest of about Rs 4.25 crore on this. In this way, your total corpus will be Rs 5.20 crore.
How much pension will be there after retirement?
If you get only 6% interest on FD at the time of retirement, then also you will get a good pension. In this way, on Rs 5.20 crore, you will get around Rs 31.20 lakh every year at the rate of 6%. Meaning you will get around Rs 2.60 lakh every month.
