Invest Rs 20,000 every month in mutual funds, you will get Rs 2 lakh monthly pension

People worry about how to secure their monthly income after retirement. Income kept increasing every year in line with inflation. This can be possible if you take a proper investment approach using mutual funds. In an emerging market like India, Equity Mutual Funds have the potential to deliver 10-12% p.a. returns over a long period (more than 15 years). Experts say that if you make your investments in a disciplined manner and start investing regularly from the age of 30, then you will not have to face financial problems after retirement easily and can get such an income. Which can beat inflation in the coming times. And can leave a huge amount for your loved ones.

Currently, an average retired couple needs around Rs 50,000 per month to live a comfortable life after retirement, provided they have a house of their own. But assuming annual inflation rate of 5 per cent, this amount will increase to Rs 2.16 lakh after 30 years. Also, this amount will increase every year after your retirement.

If you start investing in mutual funds from the age of 30, you can easily accumulate a large corpus till your retirement (at 60 years of age) which will help you to invest for the next 25 years (up to the age of 85 years or more). ) can provide pension. Also you can leave a hefty amount for your legal heir after your death.

SIP to build a retirement fund

Let’s say your current age is 30 years, and your monthly expenditure is Rs.50,000. To maintain your current lifestyle even after retirement, you need to invest Rs 20,000 every month in multiple large-cap mutual funds through Systematic Investment Plan (SIP) for the next 20 years. If your SIP investment generates an annual return of 12%, your investment will grow to Rs 10,091,520 in 20 years (by the time you turn 50). By the time you retire (at the age of 60), this fund will increase to Rs 31,342,729, even if you do not make any additional investments between 50 and 60 years of age.

Do SWP after retirement to get monthly pension

At the age of 60, your monthly expenditure would have been Rs 2.16 lakh assuming an annual inflation rate of 5%. Also, this monthly expenditure will increase every year. Therefore, set up a Step-up Systematic Withdrawal Plan (SWP) in Equity Mutual Funds to withdraw the above amount every month and increase the withdrawal amount by 5% every year. Your retirement amount will be sufficient to provide you the above mentioned monthly income.

An expected annual return of 12% will accrue evenly over the course of your retirement life at 1% per month. However, in reality this may not happen. Your capital may decrease in some years because in some years you may get more than 12% return, so that in the long term your total return will be 12%. Which is enough for your retirement fund.