"He who makes Rs. 25,000 per month through passive income is more enviable than he who earns Rs. 100,000 per month through a salary".
Assuming you're 40 years old now and expected to retire at 62 yrs
Monthly Expenses of Rs. 1 lakh p.m. = Rs. 4.5 Lakhs p.m. by the time you will be 62 years old (due to inflation @7% p.a.)
Solution: On how to generate a passive income for 20 years from now
For this, if you build a corpus of Rs. 8.77 Crore by the time you turn 62, it can easily last your full life, yielding you a monthly income of today's Rs. 1 lakh.
An interesting point to note here is the monthly income that you generate, will increase by 6-7% every year (to adjust for inflation). So, when you're 62, you'll be able to withdraw Rs. 4.5 lakh p.m., and next year, that amount will increase to Rs. 4.78 lakhs p.m, and so on.
While the corpus of Rs. 8.77 Crore might seem overwhelming, a SIP of just Rs. 50,000/- in a portfolio of equity mutual funds can comfortably help you reach that figure*. The only secret ingredient is persistence - that is staying invested for 22 years, and continuing the investment for 22 years. A lot of investors in my experience as an advisor, begin with the willpower to invest for long term (5-7 years), but start losing patience in 2-3 years. Avoid falling in that trap, and you will see how compounding creates magic for you.
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*Assuming a return of 12% p.a. (which is achievable and not ambitious).