What is 200 per day or 6000 per month?
One time meal? A biryani? Or the amount that you spend partying in a month?
If you had invested this money you would get 1Cr by the end of 25 years. 3 years later your salary might have doubled but you don’t need to increase your savings. You just need to continue with saving 6000 a month to become a Crorepati.
For sake of the above calculation, I have taken return as 12%. 12% is a reasonable return from mutual funds when you are investing for a longer duration. Over 25 years you’ll be investing a total of just 18lakhs.
The problem the current generation makes is w.r.t time. Initially, everyone tries to postpone starting the SIP thinking they will start later once they start getting more salary. They never try to understand the importance of time here. Suppose you started saving at maybe 22-23 when you are just out of college and landed in your first job you will be a crorepati by the time you are 47-48.
Time taken to reach:
1 Crore – 48th Birthday
2 Crore – 54th Birthday
3 Crore – 58th Birthday
by just saving 6000 per month.
Had you started late like at 35 then you’ll have to work till like your 60s to save that 1 Crore. No one wants to be stuck in a 9-5 job for long. At least not till their 60s. Our parents did but you shouldn’t nor should your kids. Everyone wants to retire early and follow their passion of just sitting at home painting, cooking, blogging or travelling.
If you start at 35 you can still plan on retiring at 50 but then you’ll have to start investing 20,000/- p.m. which is more than 3 times. It’s still doable as you know your salary will allow you to save 20k per month when you are 35. The problem here is the above illustration is for the case when your target is just 1Crore. But 25 years later 1Cr won’t have that much of a buying power that you think it has now. 25 years later your just normal expenses would be around 1lakh per month.
Plan well for that second innings.