Kaun Banega Crorepati: A step-by-step guide to building a corpus of crores by the time you're 60

Start early and invest regularly to build a corpus of Rs 3-4 crore.

How much is required for retirement?

A corpus of 30-40 times your current annual expenses is sufficient for achieving financial freedom. Therefore, if your annual expenses are about Rs 10 lakh, then using the 30-40X norm, a corpus of Rs 3-4 crore is what you need.

For example, if you want to build a corpus of Rs 3 crore for your retirement at the age of 60 and your current age is 35, you should start a monthly systematic investment plan (SIP) of Rs 24,000 for 25 years, assuming a 10 per cent return.

Make a financial plan

Once you have identified your target corpus for retirement, the next step is to develop a financial plan to achieve it. You "set clear, actionable objectives and work towards achieving them." Don't be intimidated by the process. Financial planning is more of a behavioral issue than an intellectual one."

Your investment plan should take into account your lifestyle expenses, inflation, healthcare, life expectancy estimates, and the age by which your retirement corpus will be exhausted.

There may be unanticipated recurring expenses that you may face, such as a home renovation or purchasing a new automobile. These expenditures must be considered when considering your retirement corpus."

Protect your corpus

Unrealistic assumptions can derail your plans for financial freedom. Therefore, it is important to be realistic about your income, expenses, and investment returns when planning for retirement.

Do not take unnecessary risks with your retirement corpus. We suggest keeping it separate from your other investments and not gambling with it in the equity markets post-retirement. This is because if you lose your retirement corpus, you will no longer be financially independent.

As you get closer to retirement, you need to protect your corpus from market volatility. This can be done by investing in a more conservative portfolio of assets.

The misconception is that you need to earn a lot of money to be financially free but it is not the only factor. You also need to be disciplined with your spending and invest a significant portion of your income.

You invest at least 30 per cent of your take-home pay in order to achieve your financial goals. You can consult with a financial advisor to determine how much you need to invest.