A Simplistic Investing Guide to INR 1 Crore by 2035
(Facts and Figures are used as per the Indian Financial Markets and hence might not hold for other financial markets)
Let us get right down to business. Most Indians are obsessed about the magic number of INR 1 Crore. But, is it really possible for an average Indian?
My answer? Yes, it is very possible and in this article I will give a simple template to do just that. To make sure it makes sense for most people, I have taken very reasonable assumptions.
So, what’s the answer?
We can do this by taking advantage of one of the best innovations in the field of investing: Index Funds. More specifically, in India, it is the Nifty 50 Index Fund.
But, What is a Nifty Index Fund exactly?
It is an investment in top 50 companies (by value) of India. These companies are responsible for most of the economic activity in India and when you invest in them you are basically assessing that India will progress further in coming years. Ofcourse, there can be short term fluctuations, like COVID-19, but overall, when we look at it every 10–15 years, India will be better than what it is currently.
How has it worked out in the past?
Looking at the image above, we observe that Nifty 50 delivered around 11–17% annualized return historically. So, being conservative, we can take 11% as our expected returns in future.
How will the math of Index Fund work out for us?
Let us plug this into our INR 1 crore model. Here are the steps you need to follow:
1. Invest INR 13,000/month through SIP in Index Mutual Funds. You can find some of the index mutual funds here.
2. Every year, increase contribution by 10% (remember your salary is also increasing). For example, in year 2, your contribution will be 13,000 + 1300 = INR 14,300
3. Repeat steps 1–2 until 2035 without interruption. Don’t stop if there is stock market crash. Don’t stop even if people tell you markets are at all time high. Remember consistency is key.
Here’s how the math is expected to work out:
And that’s it folks. You now have a simplistic model to become a crorepati by 2035. Is this model perfect? Of course not. Remember that we that we have assumed a annual return of 11% in long term. The real return might be less or more. Also, although it is not risk free, if you study the past returns and then put facts together, you will realize that it is highly likely that you will do well.
Hope you enjoyed the post, I will be soon back with more interesting content.
Curious to read more on Index Funds? Here are some great articles:
The Underestimated Power Of Index Fund Investing (forbes.com)
What Is Index Investing and Why Does It Work? | The Simple Dollar
(Disclosure — I have tried to put together the best strategy I will follow myself given the constraints above merely so that people can learn from it. It should not be considered as a recommendation)
