2 september 2024 : As many young individuals seek early retirement, they begin saving from the age of 25-30. However, some people start planning for the future only after turning 40. If you’re one of these individuals, there’s no need to panic. You can still start investing at this age and build a substantial retirement fund. The 15x15x15 formula can be beneficial if you plan to start investing at 40 and retire at 55.
With this formula, you can accumulate ₹1 crore in just 15 years and receive a monthly pension of ₹1 lakh starting at age 55. The 15x15x15 formula is related to Systematic Investment Plans (SIP) in mutual funds. It means you need to invest ₹15,000 monthly for 15 years and achieve an annual return of 15%.
How Much Should You Save?
Typically, you should invest 30% of your salary each month. For example, if your current salary is ₹50,000, you should invest ₹15,000 each month. You need to make a monthly investment of ₹15,000 in mutual funds through SIP for 15 years.
Becoming a Crorepati After 15 Years
On average, with a 15% annual return, you will accumulate around ₹1 crore in 15 years. The invested amount during this period would be just ₹27 lakh. You can then use this ₹1 crore in a Systematic Withdrawal Plan (SWP) to receive a monthly pension of ₹1 lakh.
What is SIP?
Systematic Investment Plan (SIP) is the easiest way to invest in mutual funds. Through SIP, you can invest a fixed amount in mutual funds every month. SIP is similar to a bank Recurring Deposit (RD), but it offers better returns compared to a bank. A fixed amount is deducted from your bank account at a specified time each month and invested in the SIP.
