Investment Planning at 40: Can You Still Build A ₹5 Crore Corpus?

Turning 40 without a retirement fund may feel overwhelming, but experts suggest it's still possible to create meaningful wealth. With a disciplined investment strategy and smart planning, even late starters can accumulate a sizeable corpus by age 60. A strategic monthly investment, especially one that increases with income, can help build a retirement corpus of over ₹5 crore in just 20 years, thanks to the power of compounding and consistent returns.

Why Starting Late Doesn’t Mean It’s Too Late

Many people in their 40s have prioritised family responsibilities, loans or lifestyle expenses over investments. While this may mean missing out on the early years of compounding, it doesn’t eliminate the possibility of building wealth. According to financial experts, the key lies in making up for the lost time by contributing larger amounts and ensuring those contributions grow over time.

Know Your Income-to-Savings Ratio

A fundamental principle of personal finance is the 50:30:20 rule—where 20% of income should ideally go towards savings and investments. However, for those starting at 40, a more aggressive approach may be necessary. Experts recommend investing up to 30% of your monthly income. For example:

• With a ₹50,000 salary, aim to invest between ₹10,000 to ₹15,000
  
  
  
• With a ₹1,00,000 salary, consider investing ₹20,000 to ₹30,000

Higher contributions accelerate corpus growth, especially when combined with regular income increases.

Mid-Career Investment Power

By age 40, many professionals are in mid-level or senior roles, offering greater earning potential. If you’re drawing a decent salary, allocating a larger portion to investments becomes more feasible. Experts suggest that even if you haven’t started earlier, dedicating a monthly ₹40,000 at this stage can put you on track for a significant retirement fund.

The Step-Up Strategy: A Crucial Wealth-Builder

One of the most effective methods to grow investments is by increasing contributions each year. This step-up method helps counter inflation and boosts your final corpus. For instance, increasing your monthly SIP by 5% to 10% annually can lead to substantial growth over two decades.

Here's a glimpse of how this works:

• Start with ₹25,000 monthly
  
  
  
• At 5% annual increase: by year 20, monthly investment reaches ₹66,000+
  
  
  
• At 10% annual increase: it reaches over ₹1.6 lakh/month by year 20
  
  
  

This method ensures that your investments keep pace with salary increments and inflation.

Building ₹5 Crore by Retirement: What the Numbers Say

Let’s take a closer look at what a 40-year-old investor can achieve with a monthly investment of ₹40,000, a 5% annual step-up, and a 12% annualised return:

• Total invested in 20 years: ₹1.58 crore
  
  
  
• Estimated capital gains: ₹3.51 crore
  
  
  
• Total corpus at 60 years: ₹5.10 crore
  
  
  

Alternatively, if the investor manages to earn a higher return of 14% annually, they can achieve a similar corpus with just ₹31,500 monthly SIP:

• Total invested in 20 years: ₹1.25 crore

Capital gains: ₹3.75 crore

Estimated corpus: ₹5 crore+

These scenarios underline the potential of disciplined, long-term investing, even with a late start.

Considerations for Late Investors

While projections look promising, late investors must be more cautious. Experts recommend:

• Staying consistent with investments

Choosing diversified equity mutual funds for long-term growth

Rebalancing portfolios periodically

Avoiding premature withdrawals

Increasing SIPs with every salary hike

These practices help in staying on track and mitigating risks that come with market volatility or personal emergencies.

Even if you missed the early investing years, making time work in your favour from now on can change your financial future. The combination of strategic planning, disciplined execution, and incremental growth can help transform your retirement dreams into reality.

Disclaimer: This article is for informational purposes only and should not be considered financial advice. Please consult a certified financial advisor before making any investment decisions. Projections and returns mentioned are based on expert insights and assumed average market performance and may vary.