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Slow Starter: Can You Still Build A Corpus For Retirement?

One of the most important aspects of financial planning is having sufficient funds to enjoy a comfortable life post retirement. The sooner you start investing, the better it is for growth. Compound interest is the eighth wonder of the world and the power of compounding works wonders on those small investments from an early age.

However, if you are one of those who have been complacent about investing from the start of your career and looking out for options to salvage your retirement, now, after reaching the other side of your 40, wondering if it is too late to do anything hang on, you are not alone! Many people wake up to retirement planning only when they are inching closer to that age.

Is it possible to achieve the desired corpus even if you start late?

There is no denying the fact that starting late would not give you the edge over others who started out early, but it is not impossible to build a decent corpus even if you start late. However, the journey towards creating a sizeable corpus is a little more challenging and requires huge commitment. You have to double up your savings, cut back your expenses dramatically and be extremely disciplined with your investments.

What are the options available?

For any investment that you make, several factors come into play before you choose the ideal option. Your choice of investments would depend upon the amount of corpus you wish to create, the number of years to achieve the same, your risk appetite and the amount of money you can save.

Let us assume the retirement corpus you wish to attain is of Rs 1 crore in 15 years. The table below will give you an idea about the kind of savings you need to make each month to reach the desired corpus.

Financial Instrument Rate of Return
Monthly Investment
PPF 7.9% 28,964.79
Bank FD 6.5% 32,766.58
Life Insurance Policy 6% 34,214.61
ULIP 8% 28,707.16
MIPs 10% 23,927.78
Balanced Funds 12% 19,818.62
Equity Funds 15% 14,774.04

Thus, it is evident from the above calculations that investments with lower risks require a higher amount of investment each month and as the degree of risk increases, the quantum of investment decreases. Thus, the amount of money that needs to be kept aside for equity funds is half of what needs to be put aside for a risk-free return from PPF.

Which option is the best?

The choice of investment depends on how much you can save and your risk appetite. Ideally, you should look for an investment mix that would help you generate higher post-inflation returns. Though many people would not be comfortable with equities, considering they feel they are already behind, but avoiding equities all together may not be such a wise decision.

Equities tend to be volatile in the short-run, but have outperformed all the other asset classes in 10 to 15 years horizon. Also, trying to build a corpus solely through debt investments requires huge savings each month, year on year. Ideally, you should save up as much as possible, but realistically if you haven't been able to save up from the beginning, chances are you may not be able to save enough to create an all-debt portfolio. So, either you look at a smaller corpus or equity investment. In the initial years, you can start with a higher proportion in equities and as the years to retirement decrease, you can steadily keep moving into debt products.

The best option to start investing in equity is through equity mutual funds. Equity mutual funds are professionally managed schemes and decisions taken by the fund managers are based on sound research. You can opt for SIPs to start your investments, which does not require lump sum at one go, is easy on your finances and helps you average out the cost of investment. Thus, if you wish to create a sizeable corpus, you can choose SIPs in top performing equity schemes and review their performance periodically.


Remember, it is better late than never. Starting out late has its disadvantages, but it does not mean that you cannot achieve your goals. All it requires is a serious commitment to saving, investing as much as possible and reviewing those investments periodically.