Let us understand by above scenario with additional two simple assumptions:
- You have managed your fund and succeed in acquiring 15% returns year on year.
- After 20 years, you do not have to pay home loan further. You expenses are reduced by Rs.3,00,000/- (Rs.25,000 * 12 Months) henceforth.
Years | Salary Income | Cash Savings | Cash Y-o-Y | 15% Return | Net Balance |
1 | 7,80,000 | 1,20,000 | 1,20,000 | 18,000 | 1,38,000 |
2 | 8,58,000 | 1,45,200 | 2,65,200 | 39,780 | 1,84,980 |
3 | 9,43,800 | 1,73,976 | 4,39,176 | 65,876 | 2,39,852 |
4 | 10,38,180 | 2,06,770 | 6,45,946 | 96,892 | 3,03,662 |
5 | 11,41,998 | 2,44,075 | 8,90,021 | 1,33,503 | 3,77,578 |
6 | 12,56,198 | 2,86,441 | 11,76,463 | 1,76,469 | 4,62,911 |
7 | 13,81,818 | 3,34,481 | 15,10,943 | 2,26,641 | 5,61,122 |
8 | 15,19,999 | 3,88,875 | 18,99,818 | 2,84,973 | 6,73,848 |
9 | 16,71,999 | 4,50,385 | 23,50,204 | 3,52,531 | 8,02,916 |
10 | 18,39,199 | 5,19,856 | 28,70,060 | 4,30,509 | 9,50,365 |
11 | 20,23,119 | 5,98,229 | 34,68,289 | 5,20,243 | 11,18,472 |
12 | 22,25,431 | 6,86,549 | 41,54,838 | 6,23,226 | 13,09,775 |
13 | 24,47,974 | 7,85,982 | 49,40,820 | 7,41,123 | 15,27,105 |
14 | 26,92,772 | 8,97,820 | 58,38,640 | 8,75,796 | 17,73,616 |
15 | 29,62,049 | 10,23,501 | 68,62,141 | 10,29,321 | 20,52,822 |
16 | 32,58,254 | 11,64,622 | 80,26,762 | 12,04,014 | 23,68,636 |
17 | 35,84,079 | 13,22,957 | 93,49,719 | 14,02,458 | 27,25,415 |
18 | 39,42,487 | 15,00,475 | 1,08,50,194 | 16,27,529 | 31,28,004 |
19 | 43,36,736 | 16,99,363 | 1,25,49,557 | 18,82,434 | 35,81,796 |
20 | 47,70,409 | 19,22,046 | 1,44,71,603 | 21,70,740 | 40,92,787 |
Net Cash Balance at Retirement Age: | 2,83,73,662 |
Above calculation results are quite joyful:
- After 20 years you have accumulated around Rs.2,83,73,662/- (approx. around $4,36,517).
- You have developed the skills to invest the fund and get 15% returns even after post retirement.
- Considering your fixed expenses are same after retirement and expenses will continue to grow at 8%. It’s an ample amount of money to keep you alive till 21 years post retirement life. Which is good enough to live your life happily even after retirement.
Having figured out, how important is to invest your fund and what kind of returns one should expect by investment to live your life happily even after retirement. Now let us understand 3 things, Why, Where and How to select the asset class that outfit your individual risk and return outlook. Investment assets are characteristics based on risk and return. The following are some of the popular type of investments one should go thru…
- Fixed income deposits
- Stock Market
- Real Estate
- Commodities (Valuable Metals)