After my last post on “The Secret to Build a Comfortable Retirement Income or Passive Income“, I received questions from some of my concerned readers. They said, “We don’t have that kind of money to invest right now to generate passive income. What should we do?”
Well, this post is for you.
If you don’t have the initial corpus to invest, then you should be focusing on creating that corpus. This is what some people call “planning for retirement”. However, I think that retirement can come in quite early, if you plan well and execute diligently.
Let’s start with the amount of money you would like every month when you retire.
Or maybe it is the second income that you want every month in addition to your primary source of income. I am assuming the period to be 15 years, after which you will retire.
1. Let’s say this amount is Rs 50000/- per month today. In 15 years time, this amount will be equivalent to Rs 137950/- (considering 7% annual inflation). This inflated amount is our x.
2. So then we need 75x to achieve our plan. (If you don’t understand this statement, read my earlier post). 75×137950 is equal to Rs 1,03,46,250/- which is our target amount.
3. To achieve this target amount, you would require an SIP of Rs 16883/- for 15 years (considering a compounded return of 14% per annum)
4. Once this target amount is achieved, you can proceed to the SWP (systematic withdrawal plan) for passive income, as outlined in my last post.
Read my last post here.
Consider another illustration:
1. Let’s say I want to generate a second income of Rs 10000/- per month in 10 years time. The inflated amount would come to Rs 19671/- (assuming 7% inflation). This amount is our x.
2. To generate a second income, I need a corpus of 75x, which is, 75×19671 = Rs 14,75,325/-
3. To achieve this target amount in 10 years time, I would need an SIP of Rs 5630/- per month (considering a compounded return of 14% per annum)
4. Once this target amount is achieved, you can proceed to the SWP (systematic withdrawal plan) for generating a second income, as outlined in my last post.
Read my last post here: The Secret to Build a Comfortable Retirement Income or Passive Income
Let me know your thoughts.