Building a significant fund for retirement is attainable with strategic planning and consistent investment discipline, according to financial experts. A monthly Systematic Investment Plan (SIP) of ₹24,000, combined with an annual 10% increase over 22 years, has the potential to generate a corpus of ₹6 crore.
The Power of Step-Up SIPs
For individuals starting their investment journey at approximately 34 years of age, a monthly SIP of ₹24,000 can be a strong foundation. While a consistent ₹24,000 SIP with an assumed 12% annual return over 22 years might yield around ₹3 crore, financial advisors emphasize the impact of an annual ‘step-up’. By increasing the SIP amount by 10% each year, the total accumulated fund can double to approximately ₹6 crore. This strategy helps combat inflation by aligning investment growth with increasing income over time.
Diversification for Balanced Growth
Experts recommend a diversified portfolio to balance risk and return. An example portfolio includes funds such as Parag Parikh Flexicap, Kotak Multicap, ICICI Prudential Retirement Pure Equity, Invesco India Large and Midcap, Motilal Oswal Midcap, and Bandhan Smallcap, with ₹4,001 allocated to each via SIPs. This approach ensures exposure across various market capitalizations. Furthermore, incorporating gold through Gold Mutual Funds or Gold ETFs is advised to hedge against equity market volatility and inflation. A separate monthly gold SIP ranging from ₹2,000 to ₹4,000 can fortify the overall investment strategy.
Long-term investment success, particularly over a 22-year period, hinges on discipline and periodic portfolio reviews. While solution-oriented funds like the ICICI Prudential Retirement Fund may have a 5-year lock-in, this is considered beneficial for retirement goals. The primary focus should remain on sound asset allocation and consistent investment habits rather than just the fund’s name.
