Investors usually kick start their investment plan by listing out all their financial goals that they would like to achieve in due course of their life. Investments in the form of insurance policies or medical cover to provide protection not only for yourself but for protecting your dependents as well are formulated. But the major block where most investors stumble upon is at the point where it comes to systematic, regular and disciplined savings. If you manage to pull this off and stick to it till you manage to build your desired corpus, then congratulations, you have become a fine investor.
But for those who have just kick started, definitely have a long way to go. If you wish to become a crorepati someday, a corpus worth Rs 1 crore may seem to be huge an amount for anyone who earns a decent income. But did you know that if you manage to invest Rs. 15, 000 per month or Rs. 1.80 lakh per annum after modest calculations, for 17 straight years, you might as well be an owner of a portfolio worth Rs 1 crore.
This might sound easy, but it all comes down to the level of determination you possess towards reaching the goal since if we are in the assumption of saving for 17 years, in order to accumulate Rs 1 crore worth corpus, you will need to religiously put aside Rs 15,000 for 204 straight months. If you are currently in your early 30s, assuming that your savings will grow by a modest 5% every year, Rs. 1.80 lakh saved in the first year can become Rs. 1.89 lakh in the second and Rs. 1.98 lakh in the third year and so on. Taking the average interest earned is taken at 10% over the entire duration you may have a corpus of Rs. 1.09 crore by the time you complete 50 years of age.
Now coming to the question – How can you make this possible?
This wealth can be accumulated if you manage to invest majority of your fund into equities over a long term period. And the best way to invest in equities is to invest in them through Mutual Funds. Ensure that your portfolio does not contain more than 4-5 Mutual Funds and do remember that diversification is the key to expect robust returns. Investing into the following asset classes like multi-cap, mid-cap and balanced funds can give you the right exposure. Also investing in gold is also advisable as this commodity is sure to provide you with good returns but make sure that your investment in gold does not exceed more than Rs 10% of your total investment portfolio. Invest in gold through ETFs or gold mutual funds if you do not have a Demat account rather than holding physical gold.
Now comes the part where you need to safe guard yourself and your dependents from any unforeseen circumstances. Invest into life insurance policies under pure term life cover. Although this may mean that you need to shell out a few more thousands from your income every month but it will provide you an ample protection plan. Investing in medical cover that provides general health protection along with critical illness cover can provide you with comprehensive health protection that can benefit you in case of medical emergencies.
As a prudent investor it is important that you review or re assess your portfolio at least once in every year. Save yourself from getting into any kind of debt like a personal loan or a home loan if in case you lose out on your investments because of lack of correct decision making. Although it is easy to avail funds from such avenues, they come with heavy long term implications, which you may want to watch out.