Mumbai: Have you ever dreamt of a relaxed life by the beach after retirement but don’t know how to achieve it? It may be possible with a disciplined savings plan over a long term starting at an early age.
Considering the changes in our lifestyle and spending habits, it has become necessary to plan for a secure saving fund for an after retirement life. Though it is never too late to start, earlier you start, better it is.
The benefit of compounding (earning returns on return) may do wonders over a long term and give savings an exponential boost. Check for yourself below:
1. ROI is assumed based on conservative estimate forecasts for past trends. Stocks index ‘Nifty’ has given a staggering return of 276% over 10 years!!
2. Base amount for annual investment has been considered at Rs 60,000. The same has been increased with 5% on annual basis to account for inflation.
3. Compounding frequency for the returns (ROI) is considered at annual intervals.
4. For the years nearing the age of 60, reallocation of investments from Equity to Debt is not considered. For that purpose, to reduce the risk a simultaneous debt fund may be maintained, in case of pure equity investments.
The benefit of compounding works in your favour when you start early, as then the multiplier effect increases as seen in above table. Stay tuned to Business section for a feature article on ‘Magic of Compounding’ to be published soon.
