Building a corpus of Rs 2 crore is a financial goal many Indians want to achieve, but reaching such a target requires careful planning and disciplined investing. Mostly, investors rely on a combination of consistent contributions, suitable asset allocation and favorable market performance to grow their wealth.
As such ambitious targets need a long-term investment horizon, many opt for mutual funds as an option as they are market linked. Ideal for long-term outlook, they can benefit from the higher power of compounding.
To focus on a Rs 2 crore goal, one needs to have a minimum of 15-year-time horizon. Even in favourable market conditions, reaching such goals need consistently strong returns. Compared to monthly investment plans, a larger lumpsum investment can reach this goal faster. This is because the entire amount gets invested from the beginning, which gives compounding more time to work.
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But how much amount is needed and whether 15 year-time-period can genuinely deliver Rs 2 crore corpus? Let's us find out:
Assuming that one invests Rs 25 lakh lumpsum for 15 years:
Investment amount: Rs 25,00,000
Investment duration: 15 years
Expected rate of return: 12%
Invested amount: Rs 25,00,000
Estimated returns: Rs 1,11,83,914
Total value: Rs 1,36,83,914
This shows that even under favourable market conditions, the target may still fall short. This means investors may need to either invest a higher amount or extend their investment horizon to achieve the desired corpus. Assuming that returns will consistently remain above 12% for several years may not be practical, as market performance can vary. A more realistic approach is to set achievable expectations, especially when dealing with the capital markets.
While such a goal may not be achievable within 15 years, data suggests that extending the investment horizon by just 3-4 additional years can significantly improve the chances of reaching the target.
Here's How:
Investment amount: Rs 25,00,000
Investment duration: 18.5 years
Expected rate of return: 12%
Invested amount: Rs 25,00,000
Estimated returns: Rs 1,78,45,737
Total value: Rs 2,03,45,737
This shows that with consistency and patience, investors can turn Rs 25 lakh into Rs 2 crore over 18.5 years. Still, stock market returns are never guaranteed and investors are advised to consult experts before making long-term commitment.
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