- Building a Rs 5 crore corpus requires a long-term financial strategy with consistency
- A 20-year investment horizon helps spread risks and achieve the Rs 5 crore target
- A 60:40 asset mix of equities and gold is suggested for balanced returns
Becoming a crorepati is a dream for many Indians, and multiplying that dream to reach Rs 5 crore could be a huge target. It may sound like a tedious task to build a corpus of Rs 5 crore.
For large targets like these, it is important to focus on the bigger picture. A long-term financial strategy with consistency could be helpful in building a Rs 5-crore corpus.
Investors should avoid chasing quick gains and instead focus on a long-term investment strategy with a mix of assets. With a long-term investment horizon of 20 years, a financial goal of Rs 5 crore can be achieved easily. Investors can spread their risks more evenly over the years.
Hence, a focus on equity-oriented financial planning can help one reach Rs 5 crore.
For this, investing in a mix of gold and equities may be a good option. While gold gives stability, equities offer high returns over time, maximising the gains for the investors. To invest in equities, small, regular contributions in mutual funds through systematic investment plans (SIPs) can be ideal. This allows investors to stay invested in the markets without the need to constantly monitor their portfolio.
Let us assume a 60:40 asset mix for this corpus, with 60% allocated to equities.
Based on past trends, gold has given 10% per annum returns and a good mutual fund has given 12% returns.
Here's how to generate Rs 3 crore through mutual funds in 20 years:
Time period: 20 years
Expected returns: 12%
Monthly investment: Rs 30,026
Estimated returns: Rs 2.28 crore
Total corpus: Rs 3 crore
Strategy to generate Rs 2 crore through gold investments in 20 years:
Time period: 20 years
Expected returns: 10%
Monthly investment: Rs 26,120
Estimated returns: Rs 1.37 crore
Total corpus: Rs 2 crore
Investors may also choose options like ‘step-up SIP' to reach their target faster. However, this may increase the overall investment amount over the years.
It's important to note that there is no fixed path to wealth creation. The investment strategy should be devised as per the financial goals and risk tolerance levels of the investor. Hence, it is important to carefully review the investment strategy before making any significant financial commitments.
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