You may be working hard for a comfortable present and a better future but with little planning you can ensure that you have all the luxuries when you retire. But the mantra is to start early as in that case even with a modest investment amount you can achieve your dream of having few crore as savings.
If you are 30 years old and want to have R 5 crore by the time you turn 60,if your average rate of return stands at 12 per cent per annum then all you need to save is R 14,300 per month.
The first thing you need to do is to calculate how much you would need to sustain yourself when you retire and then calculate backwards as to how much you need to save in order to get a monthly income that can cover your expenses when you turn 60 and is able to support a comfortable livelihood.
Assuming you are 30 years old and your expenditure per month stands at R 25,000 per month or R 3 lakh per annum. At an average inflation of 7 per cent,after 30 years you would need R 22.8 lakh per annum to meet your expenses and at an interest rate of 8 per cent on your savings,you would need almost R 2.85 crore as accumulated savings to be able to support this inflow per annum post retirement.
However,if you plan well,not only can you achieve that financial goal but can save to be rich enough to lead a life you always wished to.
But the trick lies in starting early as in that case you need to start with modest amount to achieve that target. For example,if you start saving with that goal from your first job itself at the age of 25 then assuming that your investments grows at 15 per cent (as you can take risk of going fully into equities) through the tenure of 35 years,you will have to invest just R 3,400 per month.
However,if you start at the age of 40,then you have only 20 years to meet that goal. Assuming your average return on investments to be 10 per cent (a mix of debt and equity) you will have to pool in R 65,800 per month to be able to save that dream amount of R 5 crore.