How can I, a 39-year-old unmarried man earning Rs 1.05 lakh monthly, reach a goal of Rs 1 crore within 5 years?

How can I, a 39-year-old unmarried man earning Rs 1.05 lakh monthly, reach a goal of Rs 1 crore within 5 years?

I am 39-year-old unmarried guy earning Rs 1.05 lakh per month. I have the following investment:

• Mutual funds – 27000 per month for the last 2 years.

• NPS – 4170 per month for the last 2 years.

• LIC Jeevan Saral – 5000 per month investing since 2011.

Please advise what investments I should make now in order to earn 1 crore in 5 years.

Name withheld

Reply by Mayank Bhatnagar, Co-founder & COO, FinEdge.

Given your current age, income and existing investments, you would be required to employ a detailed and strategic approach to achieve that goal of 1 crore in 5 years.

• Assessment of Current Investments:

Mutual Funds: I assume that you are investing in an equity fund by way of an SIP. This is a great way of investing, whereby you are averaging your investments in equity and decreasing the risk of volatility in your portfolio, however, by investing Rs 27,000 (with an assumption of 12% return), you would be able to accumulate a corpus of around 32 lacs over an investing period of 7 years.

NPS: At the time of your retirement, you would be able to generate an annuity income based on your corpus accumulation in NPS. Only 25% is allowed in case you would want to withdraw prematurely and that too for specific purposes only.

LIC Jeevan Saral: This is an endowment policy and does not qualify for an investment for creating meaningful wealth. Endowment policies do not even beat inflation, and hence, this should be looked more like a risk tool than an investment tool.

Goal Review: Based on the assessment of your investments, it is important to understand the alignment of these to your goal.  As stated above, your Mutual Fund investments are best aligned for the goal of achieving Rs. 1 crore in 5 years.

Stopping your investment: You could consider stopping your monthly contributions in NPS and LIC policy as they do not align with your goal of creating a Rs. 1 crore corpus. Instead, this amount can then be reallocated towards your corpus creation.

Accelerate your investments: You need to accelerate your monthly investments to achieve your objective. A simple calculation suggests increasing your monthly investments by Rs 50,000 for this purpose. Ideally, allocate 60% to a Large Cap Fund and the remaining amount to a flexi cap fund. A significant portion of this acceleration is already covered by reallocating the funds from the discontinued NPS and LIC policy contributions. Plan to further boost your monthly investments by an additional Rs. 10,000 each year to steadily progress towards your goal. Holding onto your investments for more than 5 years would be even more beneficial, as doing so can enhance your financial objective and bring you closer to it.

The alignment of investments to your goals is of paramount importance. It is crucial to review your portfolio in relation to your goals and take any corrective measures if need be. Remember that personal financial situations are as dynamic, and a great review process will be extremely important to achieve your goal.

(Views expressed by the investment expert are his/her own. E-mail us your investment queries at [email protected]. We will get your queries answered by our panel of experts.)

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