How Can You Save 1 Crore in 15 Years?
Last Updated : Aug. 18, 2017, 2:43 p.m.
Becoming a ‘ Crorepati ’ and living a life full of luxury and comfort is anyone’s wish. For some earning a crore is like a stroll in the park, but many fail to come anywhere near the coveted figure despite slogging the entire lifetime. However, there are ways by which you can accumulate a surplus of 1 crore and above, provided you stay focused on your goal.
Investments That Will Take You to 1 Crore in 15 Years
There are various investments that will take you to the dream 1 crore club. These include mutual fund, public provident fund, fixed deposit, recurring deposit, etc. Let’s discuss each of them separately.
Mutual Funds
Mutual funds not only ensure the growth of the money but also diversify your investments to cut down the risk element. You can invest in a mutual fund via a Systematic Investment Plan (SIP) or a lump-sum investment.
An SIP, however, offers a convenient option by allowing you to invest in a mutual fund at periodical intervals-daily, weekly, fortnightly, monthly, quarterly, half-yearly or annually. The best part is that you can start investing with a sum as low as ₹500.
Since it is about earning a crore in 15 years, you should invest in equity funds that have the potential to lift your investment value considerably over the long-term by investing in equity and equity instruments. Also, if you want to save tax in your 1 crore journey, you can look to invest in Equity-linked Savings Scheme (ELSS) that offers a tax deduction of upto ₹1.5 lakh in a financial year.
Assuming an annual return of 13%, you can accumulate a wealth of 1 crore in 15 years by investing ₹18,000 monthly via an SIP.
Public Provident Fund (PPF)
It is one of the most favourable tax-saving instruments available today. The scheme, which runs for as long as 15 years, has a minimum and maximum deposit limit of ₹500 and ₹1,50,000, respectively, in a year. The number of installments in a year can range from 1-12. You can receive a tax deduction for a limit of upto ₹1.5 lakh in a financial year.
Currently, the interest rate applicable to the investment type stands at 8.1% per annum. Keeping this rate in mind, you would need to invest ₹35,000 monthly to create a surplus of 1 crore in 15 years.
Looking at the maximum investment limit of ₹1.5 lakh in a financial year, you would have to open multiple PPF accounts to create the desired surplus. But according to the rule book of PPF, an individual can open only one account. So, you would need to open the PPF account of your family members to generate the required corpus in 15 years.
Fixed Deposit
It is a type of lump sum deposit which you need to park at a bank for a specific period of time. The average fixed deposit rates now stand at 6.50% per annum. Taking that into account, you would need to deposit a sum of ₹40 lakhs to reach 1 crore in 15 years.
Recurring Deposit
A recurring deposit can also be a tool to generate 1 crore in 15 years. Since the existing RD rates range from 6.5%-7.5% per annum, you are required to pay a monthly installment of ₹30,000-35,000 to earn 1 crore in the required time frame.
For a better understanding, you can also refer to the table below.
Table Showing Various Types of Investments
| Investments | Monthly Installment (In ₹) | Lump Sum (In ₹) | Annual Return (In %) | Interest Rate (In % p.a.) |
|---|---|---|---|---|
| SIP | 18000 | 13 | ||
| PPF | 35000 | 8.1 | ||
| FD | 40,00,000 | 6.5 | ||
| RD | 30,000-35,000 | 6.50-7.50 |
Note- The rate of return and interest can vary from time to time.
From the above information, it is clear that mutual funds present the most economical way to build a corpus. You can thus subscribe to a mutual fund and generate wealth that would allow you to deal with the inflation ahead. In comparison, other investments require an individual to park double the amount needed in a mutual fund to reach 1 crore in 15 years.