Sawal Ek Crore Ka : How to be a Crorepati in 10 years?

Today we live in era of wherein there is plethora of investment opportunities available. As such people wonder which investment options are suitable for their goals. Speaking of goals, today everyone aspires to be Crorepati in shortest possible time. One of the most common questions, that we get from potential investors is, “Can I become Crorepati in 10 years?”

Becoming a Crorepati is no child’s play but it is not so much difficult task either. Becoming one through investment in various avenues require smart efforts and solid advice. So how does one become a Crorepati in 10 years time through investing?

Let’s first look into steps one need to take before embarking the journey.

1. Do Budgeting exercise

This would be the first step in the process. Budgeting is an exercise in which the expected expenses are aligned to expected income. In simple terms, one must plan monthly expenses carefully so that enough money is saved which can later be invested. Today we live in era of credit. Each one of us has some loan running which may be home loan, personal loan, education loan etc. Adding other fixed expense such as rent etc means by 5^th or 7^th of month we already have big chunk of our salary/income already gone due to EMI outgo. We also have some expenses which comes at fixed time such as child school fees etc which is once in a year big expense. As a Smart Investor, one should write all such expenses that may come in the year and plan accordingly. e.g if yearly tuition fees of 24000 rupee payable in month of April then one must set aside 2000 each month so that in April other things aren’t affected. Such simple sounding exercise will built a solid ground for your aspiration to be a Crorepati.

2. Manage and plan for expense wisely

As illustrated in example above, if you have one big known expense in one particular month, you can plan much in advance so that the expense would be a smooth affair and won’t affect your other planning/investments. Also restrict unwanted expense and/or impulse buying to certain limit, let’s say Rs 2000-3000 each month so that these won’t eat into your long term goal/dream. Remember the saying; A Rupee saved is a Rupee Earned

3. Go for a Financial Planner

Today we believe in what Google or any search engine show to us. Also there is plethora of site on financial planning which we can visit. But note these sites will only show you past performances without linkage to your risk profile which can be misleading. Also much content now days are 'sponsored' which may show the picture in a biased way.  Therefore it is of paramount importance to go with independent advice of your financial planner who is expert in field of finance and investments. As we go to a doctor for solutions in matter of health, a financial expert will offer expert advice in matter of wealth. So carefully choose the right financial planner for you who will guide you through your investments over the period of time.      

4. Make Informed Investments in the Right Asset Class

This is the ultimate step which will decide if your desired goal will be met or not in the selected timeframe. Today we have many asset classes e.g. FDs, Gold, and Mutual Funds etc. The asset class should be chosen should be aligned to your financial objectives, the timeline and risk appetite. The choice of the right class /schemes and management of the investment portfolio should be done in close consultation of your financial planner.  Needless to say, there should be a right balance in the asset class / schemes so chosen so that risk can be optimized while balancing the gains.

5. Stay Focused, Monitor regularly and be Patient

In Life we do face bad days/ hiccups sometime even though the end result is positive. The same will be true for our investments and markets also. No market moves in linear fashion i.e. in one direction alone. Today stock markets have become very volatile owing to oil prices, trade wars etc. Day to day markets swing or even 1-2 quarters of negative markets conditions shouldn’t affect our long term investment plans. Stay focused on long-term financial goals. Review your investment yearly once for performance along with your financial planner. For investments like SIP in which one wouldn’t invest huge amount lump sum but in a staggered way, give minimum 3 years to show real performance. Note patience is a great virtue of a good investor.            

Now let’s see with an example on how goal of 1 Crore can be achieved in 10 years.

Mr. Vijay is working in an IT company with a take home salary of 65,000. His monthly expenses are in a range of 30,000-35,000 on each month considering expenses such as Rent, household expenses etc. This means net investible surplus of 35000 (higher side) to 30,000 (lower side). So we will consider average and take 32,000 in this example as surplus for investment on an average each month. The asset class which the investor shall choose is “Mutual Funds” since the targeted amount and duration both are aggressive. Mutual Funds in India has grown from few thousands Crore (asset under management) to lakhs of Crore in matter of one decade in India. Also the investments shall be done into midcap, multicap and largecap in order to optimize risk yet keeping in mind targeted corpus. Also the rate of increment of investment should be 10% pa so that we needn’t start with high SIP amount yet achieve our goal

So now we have clear action plan:

Target: 1 Crore

Duration: 10 Years

Asset Class / Instrument: Mutual Funds

Monthly Amount needed: Rs 32,000 (at inception)

Schemes : 40% in Midcaps / 30% in Multicap and 30% in Largecap
Yearly increment in SIP amount: 10%

SIP in Midcap Mutual Funds– 40% should be invested in Midcap Funds selected in consultation by your financial advisors. The risk involved is moderate to high and returns are expected at 13-15%

SIP in Large cap Equity mutual Funds– 30% of the monthly investment shall go to Multicap funds and returns expected at 10-12%. The associated risk ranges from moderate to high but these are expected to be less volatile than Midcaps.        

SIP in MultiCap Equity Mutual Funds– 30% of monthly investment should flow to MultiCap with expected returns of 12-14%

With this strategy, the Target of 1 Crore corpus can be achieved in a time span of 10 years. Note even with conservative estimates i.e. considering lowest of return % for each schemes will also yield desired outcome since we are committing our investment for long and increasing the investment each year in-line with our goals.

Note the returns are assumed to follow historical returns from each category. Note the risk associated with each scheme largecap or midcap etc vary greatly and one shouldn’t invest 100% in one scheme only looking after return %. Role of financial advisor is crucial in the whole process

About Us:

We are a neo advisory firm that believes in Goal based investment. We offer investment services in Mutual Funds and also retirement/ Life insurance solutions. We have over a decade experience in finance sector. For any clarification / investment needs call us on 9325295502. We provide services across India. Also visit us on www.growwealthadvisors.com 

We are now on instagram. visit us on https://www.instagram.com/growwealthadvisors/