This may sound very simple, but then simple things which we think are common sense need to be told…right?
So what are the 4 crucial factors that determine your retirement corpus amount? Well if you do not know, here are the 4 factors:
1. How much you invest:
Many people think that they know that power of compounding works, etc. still clearly a rising SIP is better than a flat SIP. So if you start with a Rs. 5k sip in your first year at work, slowly keep increasing it to 6k, 7k, 10k by the time you are 35 you could be investing Rs. 50k a month….surely it has a greater impact. The more the merrier. Higher the amount, greater the corpus.
2. Asset allocation
I know I have an equity bias, but if you are a 2007 MBA and have started a SIP listening to me, apologies too. Take a longer view on a well managed fund..and look at it closer to retirement, I am sure you will like the advice. Sadly 4-5 year SIPs do not look so healthy, but when the market goes to 30,000 and your friends say ‘Arre 15000 mein invest karna chahiye tha…you can say…’yes I did it’. Believe me, your portfolio looking like a hero in a down market is far more important. In a rising market all look smart. So when you are under 50 please be 100% in equity. Of course your pf and ppf are in debt..that is good enough.
3. time, time, time: have said this a zillion times. How long a time your money spends in the market is far more important. So even if you can start only a small amount like Rs. 50oo…please make a start. Not even 5k? start with 4k…but for heavens sake make the start…
4. the discipline to stick to this: let me tell you guys, it is not easy. Too many people around you will push you, ridicule you, media will do stories like ‘is long term investing dead’ or ‘hdfc top 200/ franklin india blue chip / I pru discovery/ Dsp / has done badly in 3 quarters’. Learn to ignore the noise just stay focused. My dropping dead should not bother you / change your focus. You are building a corpus for YOUR retirement, not mine. Forget all the jargon and super exclusive pms or other shit that is shown to you.
Remember kids qualified in the past 4-5 years and who are doing a SIP listening to me…the dates have just changed, but the logic of equity and long term still holds.
I was clear that you were building a corpus for your retirement. If that has not changed, nor will my promise. Remember speed at a point in time is not as imp as the avg speed of the journey!
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