Produced by: BT Desk Designed by: Manoj Kumar
In your 40s, you’re likely earning more and can set aside a larger portion of income. With 15-20 years to retirement, now is the time to build a strong financial foundation for the future.
Estimate how much you’ll need in retirement. For instance, with current annual expenses of ₹12 lakh, inflation-adjusted costs at retirement could rise to ₹38.48 lakh. Plan accordingly to save a sizable corpus.
Your 40s allow room for a mix of equities and fixed-income investments. Equities offer growth, but as you approach 55, reduce risk by increasing allocations to debt instruments.
Your income often outpaces expenses in your 40s, allowing you to save more. Create a plan to step up your savings each year, taking advantage of rising disposable income.
With a 15-20 year horizon, SIPs in equity mutual funds can build wealth. For conservative investors, hybrid funds offer a balanced approach with equity and debt exposure.
Use EPF, PPF, and NPS to your advantage. EPF lets you contribute 12% of your salary, while PPF offers safe returns with an annual cap of ₹1.5 lakh. NPS also provides tax benefits alongside retirement savings.
Create separate investment buckets for children’s education, marriage, or home upgrades. Debt instruments work for short-term goals, while equity can fuel long-term aspirations.
Annual reviews are crucial. Adjust your portfolio based on life changes, like a salary hike or nearing education expenses. A step-up SIP or shifting to debt funds can optimize your plan for evolving needs.