₹1000 SIP at 25, earning ₹20,000 a month after 50
If an SIP of Rs 1,000 is done every month from the age of 25 and the investment is continued for 25 years, then the fund created at the age of 50 can give a regular income of up to Rs 20,000 per month through SWP.
Can a SIP of just ₹1,000 per month generate pension-like income after the age of 50? The answer is yes, if you invest consistently over a long period of time and then use SWP (Systematic Withdrawal Plan) correctly.
First 25 years: Build a corpus through SIPs
Let's say you started a SIP of Rs 1,000 per month at age 25. Time: 25 years (from age 25 to 50) Average return: 15% per annum
The total investment in 25 years will be
1,000 × 12 × 25 = Rs 3 lakh
If you earn a 15% return, your fund could grow to around ₹27.56 lakh by the age of 50. This means that by investing just ₹3 lakh, you can build a corpus of over ₹27 lakh. This is the power of compounding.
Next 25 years: Monthly income from SWP
Now, at age 50, you transfer this ₹27.56 lakh to a debt mutual fund or a conservative hybrid fund. Let's assume an average annual return of 7.5%.
If you withdraw ₹20,000 every month for 25 years (from age 50 to 75), the total withdrawal will be ₹20,000 × 12 × 25 = ₹60 lakh. Still, you'll have a savings of over ₹2 lakh. This means your money will continue to yield ₹20,000 every month for 25 years.
Why is SIP + SWP better?
- Opportunity for growth over equity in the first phase
- Facility of regular income later
- Better tax efficiency than FD
- Income can be increased or decreased if needed.
- The money is not completely locked up, the investment continues
to bear in mind
20,000 rupees won't be worth the same as it is today after 25 years, as inflation keeps rising. However, this income can be a significant support in your retirement.
The biggest lesson is that the amount may be small, but if you invest consistently and over a long period of time, that small SIP can generate a substantial pension-like income over time.