Achieving a corpus of 10 crores INR over two decades is commendable, but certainly within the realm of possibility given the right approach. Let’s break down the numbers and the recommended investment avenues for someone keen on medium risk.
- Determining Monthly Investment: Assuming an average annual return of 12% (typical of equity mutual funds over long periods), you’d need to invest approximately ₹50,000 per month to accumulate close to 10 crores in 20 years. This estimation uses the future value of a series of payments in an annuity formula. However, it’s essential to factor in inflation; thus, revisiting and possibly increasing your investment amount every couple of years would be prudent.
- Direct Equity: Since you’re inclined towards medium risk, some exposure to stocks that align well with a proven investment philosophy like Roots & Wings will help: the Roots (strong balance sheets, low debt, high return on equity, and quality management) and Wings (consistent revenue and profit growth) investment philosophy.
- Diversified Equity Mutual Funds: To inject some growth into your portfolio, consider allocating a portion of your monthly investment to diversified equity mutual funds. They invest across sectors and company sizes, spreading the risk.
- Debt Mutual Funds: For added stability, invest in debt mutual funds, especially corporate bond funds and banking & PSU funds. They provide better returns than traditional fixed deposits and help cushion the volatility from equities.
- Gold: Not in physical form, but via gold mutual funds or sovereign gold bonds. Gold acts as a hedge against inflation and provides diversification, ensuring a layer of safety to your investment.
- Systematic Investment Plans (SIPs): Regular monthly investments through SIPs in mutual funds can help in averaging out the cost of purchase and remove the need to time the market. It’s a disciplined approach to long-term wealth creation.
- Avoid High-Risk Ventures: Steer clear of derivative trading, options, and calls. Leveraged investing is also a strict no. As SEBI statistics highlight, most individual traders in such segments end up incurring substantial losses.
- Consultation with a SEBI Registered Investment Advisor: Investment is not just about numbers; it’s also about aligning with individual goals and risk appetite. Engaging with an advisor ensures your strategy evolves with market dynamics and personal circumstances.
Remember the words of Benjamin Graham, the father of value investing: “The individual investor should act consistently as an investor and not as a speculator.”
To sum up, by starting early, choosing the right mix of investment avenues, and periodically reviewing your portfolio, you’re setting yourself up for success. If you ever feel the need for guidance, Jama Wealth’s portfolio management services and associate investment advisory services are at your disposal.
