Money Tips: Do you want to save Rs 1 crore till retirement and think that you will have a great life?

Often we consider 1 crore rupees to be a big amount. Since childhood, we have heard that if there is 1 crore in the bank account, then life will be spent peacefully. Many people keep a target of collecting 1 crore rupees till retirement so that life can be spent well after that. But do you know that today's 1 crore will become just a small amount after 25 years? Let us understand this thing from the perspective of investment, inflation, and tax. If a person invests 21 thousand rupees every month and gets an average return of 12% per annum, then this amount can become 1 crore rupees in 15 years. This is called the miracle of compounding i.e. compound interest. The sooner you start investing, the bigger the benefit will be.

But on the other hand, inflation also has its force. Financial educator Akshat Srivastava has explained how 1 crore rupees will not hold so much value in 25 years. If the inflation rate remains at an average of 7%, then in 10 years the real purchasing power of Rs 1 crore will decrease to around Rs 50 lakh. In 15 years it will decrease to Rs 36 lakh and in 20 years only Rs 25 lakh will remain. That is, the Rs 1 crore today will be enough for you to buy a normal house or meet limited expenses after 25 years.

You will have to raise Rs 1.4 crore. You are left with the real amount only after tax deduction. Now suppose, you get an inheritance of Rs 100 crore from somewhere. If you do not invest wisely or do not build a strong portfolio, then this entire wealth can be finished in a year. Bad investment decisions and overconfidence often lead to big losses.

Not only this, if you pay 1% extra commission on financial products during investment, then it has a big impact. For example, if a SIP of Rs 21,000 gives 11% return for 40 years, it becomes around Rs 14.78 crore. But if the return is 12%, the same SIP becomes Rs 19.58 crore. That means a difference of just 1% can reduce your total portfolio by up to 32%.

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