In The Half-Light Of Dusk

Build a retirement corpus that beats inflation and lasts as long as you do

- Abhinav Singh

Bengaluru-based marketing professional Atul Kumar, 45, has been exploring investment options as he wants to build a corpus for his retirement days. He has been investing in Public Provident Fund (PPF) in the past five years. He could not invest much till he was 40 because he had to service a housing loan. He also has an Employee Provident Fund (EPF) account. “I have a term, health and a medical insurance running to help me and my family to deal with any contingency as it should not affect my investment cycle,” he said.

Though there are many options available for Kumar, the norm of retirement planning is, the earlier you start investing, the better your chances of creating a good corpus for retirement. For instance, if you are 30 years old and invest ₹1 lakh in a mutual fund growing at 15 per cent annually, you get ₹16 lakh when you are 50. But, if you make the same investment at 40, you get only ₹4 lakh when you redeem it ten years later. That is the power of compounding.

“Assume that your desired retirement age is 60. If you are 30 now, you have 30 years to reach your goals. This is a good length of time to accumulate a decent retirement corpus with low-risk instruments,” said Adhil Shetty, founder and CEO of BankBazaar.com. “Delaying investment means having to take higher risks later in order to achieve the same goals. You would have to invest in riskier funds, reduce your retirement corpus to reduce risk, stretch your retirement age, or increase your monthly investments to meet the goal. Don’t postpone building that corpus. The sooner you start, the better.”