Start early to reach your goal of Rs 1 crore fund
If you are among those who do not want to sit through long financial planning discussions, here is a systematic way to reach your first Rs 1 crore
When we think of retirement, the first number that pops in our mind is Rs 1 crore. It somehow looks like the magic number which can handle most of our financial worries. But do you have a roadmap to reach your first Rs 1 crore, as the proverbial ‘first crore’ can often be the most crucial?
If you are among those who do not want to sit through a pile of papers, discussions and charts there is a systematic way to reach your first Rs 1 crore landmark. All you need is to start early and maintain financial discipline. Here is how:
Stay disciplined
You need to save Rs 5,000 every month and invest in the instrument that suits your risk profile. For example, a conservative investor can go for a debt fund while an aggressive investor can go for equity mutual funds that have the track record of giving higher returns. Higher the risk, higher the return, and the quicker you reach the target. The table below shows that at the rate of 8% you will accumulate Rs 1 crore in 35 years, at the rate of 12% you can achieve the landmark in 27 years, and at the rate of 16%, it can be achieved in 22 years.
Why target Rs 1 crore
The sooner you reach Rs 1 crore quicker you would reach the next goal of Rs 10 crore. The time which you take to reach Rs 1 crore will come down drastically after every incremental crore. Your next crore will take a much shorter time to double than the previous one. It is one of the surest ways to accelerate your wealth generation at a faster speed at the later part.
Having said that there has to be a match between the target, present income, and the time horizon. Too often we find that people are very aggressive even if they have limited means to accomplish it. If you start saving early into your career then you will need a lesser investment amount as you will have the advantage of a longer time horizon. However, if you are already midway through your career then you would need a higher investment amount as you have now a lesser number of years to invest. Hence, the sooner the better.