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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  1. Thank you sir .Your constant Guidance helped us to understand Importance of Fairly Large corpous( 40 Times of our Annual Expense at the time of our retirement.)So if Monthly Expense for running Simpe middle class life is betn 15000 to 30000 pm then annualy it comes to ard 2 Lacs to 4 lacs (Rounded to nearest complete lacs.Err on Higher side while Planning),we will require 1 cr to 2 crs(Err on Higher side) .This is atleast amount.This assumes ,Proper Medical cover ,NO EMI at Retirement and “Goods Replacement Fund”…available seperatly ….and then reverse engineering NOW to come to an amount to be Invested in diffrent asset classes…Delayed Gratification ,Moderate Life style ,NO or Very Less EMI( Thanks to you ..NO LOAN IS GOOD) are the things already learned and in Execution mode ….KEEP IT UP SUBRA ! Your Readers are not just reading but Learning and following your teachings.Many thx

  2. expenses at the time of retirement…NOT now. So if your expenses at the time of retirement is Rs. 50k a month, and you are just 55…you will need 50,000 * 12 * 40 = Rs. 2.4 crores.

    Assumption is u will have another corpus for the assets that u need to buy….THIS IS ONLY FOR DAY TO DAY EXPENSES. So if you need to buy 2-3 cars, 1 house,…all that is NOT included…

  3. Yes Subra.Many thx for the update…so basically 2 Corpous.One for Day to day Leaving and other for Asset Buying or asset replacement .YES SIR !Thanks

  4. Kya baat boli hai Sir, “Remember speed at a point in time is not as imp as the avg speed of the journey!” too good 🙂

  5. That speed comment is worth engraving on gold.

    One holds on to the Patheja clones in ones portfolio in the vain hope of someday getting a somewhat better return even if you’re selling at a huge loss… so silly I know.

  6. Pooja Ramakrishnan

    Subra lots of articles on Retirement…is it not time for a ‘New and Revised Retire Rich Invest Rs 40 a day’

    has there not been enough change in the world to create a new book?

    liked the average speed and speed at a point in time…agree with Raja..’loved the quote’…

  7. Let us all take a print out of this article, frame it and hang 1 copy at home and another one in office cubicle. Any time we hear too much noise on market; read this article as a prayer!

  8. “. So when you are under 50 please be 100% in equity. Of course your pf and ppf are in debt..that is good enough.”

    I am glad you said this. I am under 35 and fully on equity MF. It just reinforces my beliefs and provides enough counter arguments during arm chair discussions with friends 🙂

  9. Subra sir,

    Can you please explain this line or provide some more information about this one

    “rising SIP is better than a flat SIP”.

    For example if a person could afford some 30K at age 30. Will you suggest to start from 20k?

    because i was under the impression , “invest more at the start the maximum as much as possible to take the advantage of compounding.”

    Is this statement wrong.

  10. Background: Following your blog religiously for 4 years now.

    Wanted to know what should I do with the corpus of say 2.4 crores the day I retire. FD or is any other option available?

  11. dear Lakshmipathy G

    “rising SIP is better than a flat SIP”.

    “invest more at the start the maximum as much as possible to take the advantage of compounding.”

    both the above statements are true

    if you are able to afford saving 30k at 30 yrs, simply start and go ahead
    but then increasing it to 40k at 35 yrs or may be at 40 yrs, is better than continuing at 30k for ever

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