Retirement Planning: How a One-Time Investment of ₹10 Lakh Can Create ₹3.5 Crore Retirement Corpus

When envisioning retirement, financial security and comfort take precedence. Throughout life, individuals work tirelessly, earn, and make financial sacrifices to secure a stable future. As income sources diminish during retirement, having a reliable corpus ensures independence, dignity, and the ability to maintain one’s lifestyle without financial stress.

The question arises: how does one build such a corpus? Passive income from investments plays a crucial role. This investment can be structured either as a lump sum or through periodic contributions.

This article explores the significance of a retirement corpus, its necessity, and the impact of compounding in wealth accumulation. Specifically, we examine how a single investment of ₹10 lakh can potentially grow into a substantial retirement corpus over time.

Understanding Retirement Corpus and Its Importance

A retirement corpus is the sum of money set aside to fund expenses post-retirement. It ensures a stress-free life without financial dependency on family or external support. Given the rising cost of living and inflation, having a well-planned corpus is essential to maintain one’s lifestyle and meet medical and other unforeseen expenses.

Key factors influencing retirement corpus growth include:

• Investment tenure
• Rate of return
• Power of compounding

Let’s examine how a one-time investment of ₹10 lakh can generate a sizeable corpus over different time frames and return rates.

Scenario 1: 12% Annualised Return Over 20 Years

Investing ₹10 lakh and allowing it to grow at an annual return of 12% for 20 years results in the following:

• Investment Amount: ₹10,00,000
• Annual Return: 12%
• Duration: 30 years
• Total Corpus: ₹35,949,641

Breakdown:

• Principal Amount: ₹10,00,000
• Total Interest Earned: ₹3,49,49,641

This demonstrates how compounding amplifies wealth over time. A single investment left untouched for 3 decades can create a substantial nest egg.

Scenario 2: 15% Annualised Return Over 24 Years

A slightly longer investment tenure with a higher annual return of 15% over 24 years further magnifies the corpus:

• Investment Amount: ₹10,00,000
• Annual Return: 15%
• Duration: 24 years
• Total Corpus: ₹35,790,617

Breakdown:

• Principal Amount: ₹10,00,000
• Total Interest Earned: ₹3,47,90,617

The additional four years of compounding significantly impact the corpus, highlighting the importance of an extended investment horizon. Calculator used for calculation. 

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