There is no right age to start savings for your retirement. The earlier and more consistent you are, the better will be your saving in the long run. There is always a substantial difference in the wealth of people who start saving early through a systematic financial plan as compared to those who delay.
Let's look at an example:
Both Ajay and Vijay want to retire at the age of 60 years.
Ajay invests Rs. 50,000 towards his retirement corpus while Vijay invests a total of Rs. 1,00,000 . However, inspite of investing less, Ajay accumulates Rs. 1.49 crore, compared to Vijay's accumulation of Rs. 1.01 crore!
Note: The assumption is that both investments appreciate at the rate of 10% p.a.
What Ajay had in his favour was time! He began investing a sum of Rs. 50,000 p.a., at the age of 25 years. Vijay on the other hand, saved Rs. 1,00,00 every year from the age of 35.
Remember, more than the amount saved it is the rhythm of savings that helps you realize your dreams faster.
While income, expense, investments and liabilities form the four pillars of any financial plan, its success actually depends on the ability to manage these well. This is where Life Insurance forms a critical part of any financial plan. Life insurance is a long term product that provides you the benefit of compounding while ensuring that your loved ones are taken care off.
Inflation is the rate at which the general level of prices for goods and services rises. This erodes the purchasing power of your money. This effectively means that with Rs.100 today, you will be able to purchase more goods than with Rs.100 after 10 years.
With inflation rising continuously, how do we ensure that we have sufficient money to fulfill our dreams? The answer is clear – through regular and systematic savings.