Earn Rs 50,000 salary? This SIP strategy could help you build Rs 5 crore wealth in less than 30 years

The dream is totally within reach, and you can make it happen with the right investment strategy and by understanding the maths behind it.

With a monthly salary of Rs 50,000, achieving a Rs 5-crore retirement corpus might seem a bit far-fetched, but it’s definitely possible with the right amount of investment.

To start with, commit to investing a good portion of your salary every month and then raise the investment amount as your income rises.

If you don’t raise the investment amount with every jump in income, the Rs 5 crore retirement corpus target can take more than three decades.

Every month, put 30% of your monthly salary, i.e., Rs 15,000.

Assuming that you get a 12% annualised return on it, you will be able to create a Rs 5 crore corpus in 31 years.

It is true that 31 years is a long time. But you can certainly achieve the goal faster by investing more. Here’s where step-up SIPs come into play.

If you increase your investment amount by 7% every year, and continue earning a 12% annualised return, a retirement corpus of Rs 5 crore can be achieved within 26 years instead of 31.

If the initial SIP has been raised to Rs 17,000, and you keep increasing it by 7% each year, the same corpus can be achieved in 25 years.

Experts suggest following the 50-30-20 rule, where 50% of your take-home goes to needs, 30% to wants, and the rest, 20%, to savings and investments.

Here’s a look at your corpus in 25 years if you invest 10%, 20%, 30% and 40% of your Rs 50,000 monthly salary (at 7% annual step-up, 12% annualised return):
10%: Rs 1.47 crore
20%: Rs 2.95 crore
30%: Rs 4.47 crore
40%: Rs 5.91 crore

With a monthly salary of Rs 1 lakh, you can reach the Rs 5 crore retirement corpus target in 21 years if you invest 30% of the amount.

The same corpus can be reached in just 19 years, if you invest 40% of your Rs 1 lakh monthly salary