Retirement is the last thing on our mind during our 20s. However, if you begin investing for retirement as soon as you begin earning it will prove to be a brilliant financial move. The reason is the magical effect of compounding. It's what happens when your interest keeps earning interest, year after year.

Ideally, you should be saving about 10% of your monthly income towards your retirement corpus so that you have a significant amount 20 to 30 years later.

If you are 25 years old at this moment and, earn approximately Rs 30,000 per month and you invest Rs 2500 every month in SIPs, increasing it by 10% every year as your salary increases, your savings can be anywhere between the following amounts:

  • Rs 4.12 crores when you turn 60 – This is at a balanced return of 12% per annum
  • Rs 7.2 crores when you turn 60 – This is at a slightly better return of 15% per annum

The earlier you start investing, the more you can benefit from compounding. That's why you need to get going as soon as possible.

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