Monthly income of ₹2.5 lakh with one-time investment of ₹10 lakh; here’s how to make it possible

Planning for retirement at a young age may seem far-fetched, but starting early can be one of the smartest financial decisions you’ll ever make. In this article, we explore a potential route to generate a steady monthly income of ₹2.5 lakh after retirement with a one-time investment of ₹10 lakh today — without making it sound like a product recommendation. Let’s understand the journey of disciplined investing and how it can pay off big time in the long run.

Your current scenario: Just 25 and already planning ahead

You’ve been working for 3years and just turned 25. Over these years, you’ve managed to save a decent amount and also received a loyalty bonus from your employer. You’ve now accumulated ₹10 lakh, and rather than spending it, you want to plan your retirement, which is 30 years away.

You foresee your monthly expenses at retirement (age 55) to be in the range of ₹2.25 to ₹2.50 lakh — which means you’ll need a significant retirement corpus. But instead of monthly SIPs or recurring investments, you’re considering a one-time lump-sum investment.

The power of compounding over 30 years

Let’s assume you invest ₹10 lakh today in a mutual fund that delivers an average annualised return of 12% over the next 30 years. While this return is not guaranteed, historically some equity mutual funds have managed to deliver similar returns over the long term.

• Investment Amount: ₹10,00,000

• Expected Annual Return: 12%

• Investment Duration: 30 years

• Corpus at 55: ₹2,99,59,922

So, by the time you turn 55, your ₹10 lakh investment could grow to nearly ₹3 crore, thanks to the power of compounding.

Starting a monthly income using SWP

Now, instead of withdrawing the entire amount at once, you decide to set up a Systematic Withdrawal Plan (SWP) — a facility that allows you to withdraw a fixed amount every month from your mutual fund investment while the remaining amount stays invested and continues to earn returns.

• Corpus at 55: ₹2,99,59,922

• Monthly Withdrawal (SWP): ₹2,50,000

• Duration of Withdrawal: 15 years (until age 70)

• Expected Return during Withdrawal Phase: 8% annually

What the numbers say

Using an SWP with the above parameters, here’s what your retirement income and final corpus might look like:

• Total Withdrawn Over 15 Years: ₹4.5 crore

• Final Corpus Left After 15 Years: ₹1.2 crore

• Total Return Earned During Withdrawal Period: ₹2.7 crore

Even after withdrawing ₹2.5 lakh every month for 15 years, you’d still be left with over ₹1 crore, providing you with further financial security for the years beyond.

Why this approach can work

• Early investing advantage: Starting at 25 gives you the compounding edge that late starters won’t have.

• One-time effort: A lump-sum investment minimises the hassle of monthly commitments.

• SWP flexibility: You control how much you want to withdraw and can adjust as per your lifestyle or inflation.

• Continued growth: Even during retirement, your money continues to earn — you don’t stop compounding at 55!

Points to consider

• Market risks: Mutual funds are market-linked, and returns are not guaranteed.

• Inflation: While ₹2.5 lakh may seem enough today, ensure it matches future cost-of-living projections.

• Taxation: SWP withdrawals are subject to capital gains tax depending on the holding period and fund type.

Conclusion

This article shows how starting early and staying invested can potentially lead to a financially secure retirement. With a well-planned one-time investment, you could generate a monthly income that supports a comfortable lifestyle while still keeping your corpus growing in the background.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.