SIP 555 formula: As ‘SIP 555 formula’ has three five, the first 5 means to aim your retirement five years early at the age of 55, the second 5 means to increase your investment 5 per cent (step up SIP), and the last 5 means to make the corpus of Rs five crore. All this can become possible if you start investing as early as possible at the age of 25.

Some investors prefer market-linked investment schemes, others opt for guaranteed return programmes. It’s entirely up to an individual how they plan their retirement. Mutual fund investment through SIP has also become a popular investment strategy for retirement planning. SIP investment with proper research can help one build a huge retirement corpus in the long run.

Now, let’s take a look at the 555 formula and its returns.

As we said above, the sooner you start investing, the more money you will make. Now, here we prove that with calculations. In this, your age i.e. investment age is 25. Only Rs 12,000 have to be deposited in SIP every month. On average, you will get a return of 11 per cent till retirement. Now, know how the 555 formula works and can help you generate a corpus of over Rs 5 crore.

The 555 Formula states that you begin your investing journey in mutual funds at the age of 25, invest for the following 30 years, raise your investment money by 5 per cent each year, and retire at the age of 55.

Know the calculation
You invested Rs 12,000 every month in SIP. Increase it by 5 per cent every year, on which you are getting an average return of 11 per cent. By doing this, your total investment in 30 years, i.e., at the age of 55 will be Rs 95,67,194. Due to the power of compounding, you will get a long-term capital gains of about Rs 4,25,07,462. In this way, your total corpus will be Rs 5,20,74,656.

How much pension you will get after 60 years of age?
Once you get the corpus of Rs 5.20 crore, you can invest this money in an FD. At the interest rate of 6 per cent, you will get Rs 31.20 lakh yearly, which means Rs 2.60 lakh every month.