Setting your eyes on a corpus of Rs. 2 crore over the next 10-15 years is a commendable target. It’s like you’ve set the coordinates for your financial journey and now we need to calculate the fuel (investment) needed to reach that destination.
Let’s do the math. The exact amount of monthly investment required will depend on the returns that your investments can generate.
Assuming an average annual return of 12% (a reasonable assumption for a well-diversified portfolio of equity mutual funds over a 10-15 year period), here’s what you would need to invest monthly:
- For a 10-year timeframe: To accumulate Rs. 2 crore in 10 years with an annual return of 12%, you would need to invest approximately Rs. 87,000 per month.
- For a 15-year timeframe: To accumulate Rs. 2 crore in 15 years with an annual return of 12%, you would need to invest approximately Rs. 37,000 per month.
- For a 20-year timeframe: To accumulate Rs. 2 crore in 20 years with an annual return of 12%, you would need to invest approximately Rs. 20,000 per month.
The third option makes your current investment of Rs. 20,000 per month seem much more manageable if you can afford to take a longer view. And given the likely retirement age and your current age, you stand a realistic chance of making it.
Please do remember that these calculations assume a steady return of 12% every year, while in reality, market returns can fluctuate significantly from year to year. It’s also important to factor in the effects of inflation on your future purchasing power. Rs. 2 crore may not have the same buying power in 10-15 years as it does today.
When it comes to investing, it’s also important to keep your risk tolerance and investment goals in mind. If you’re uncomfortable with the risk associated with a heavily equity-oriented portfolio, you might opt for a more balanced allocation that could potentially offer more stability, but lower returns.
This might seem like a tall order right now, but don’t be discouraged. Remember, every journey begins with an initial impetus. It’s fantastic that you’re investing Rs. 20,000 per month, and with a disciplined approach, consistent investing, and potential salary increments, you could gradually increase this amount.
Consider working with a SEBI Registered Investment Advisor who can understand your risk profile, financial goals, and tailor an investment strategy to suit your needs. A well-thought-out financial plan can be your guiding star on your investment journey. Happy investing!
