Here's How to Build a Corpus of 10 Crores with Half the Investment!

Ever dreamt of that beach vacation with a pina colada in your hand, knowing a cool 10 crores sit pretty in your investment portfolio? That's not a pipe dream. A good idea, a corpus of a decent size, but it requires a strategic deep dive into the world of investing. And here is the fun part done correctly, half the money you may think necessary for this purpose may be enough to meet the requirement.

Investment Styles: Tailor Your Approach to Your Risk Appetite

Not everyone is a risk-loving maverick and there is no "standard" type of investor. Some of the more popular style considerations include:

The Conservative Investor: This category is for an investor seeking to protect capital initially. It considers the low-risk category instruments like Public Provident Funds (PPF) or Fixed Deposits (FDs), which provide steady and predictable returns.

The Balanced Investor: In search of a middle path. It includes a judicious combination of low-risk elements like debt funds and moderate-risk elements such as equity mutual funds.

The Aggressive Investor: Strap Up! At the core of this strategy is a high potential for returns that might also bring up high risk. Stocks and investments in promising startups through the angel investment network fall in this category.

The Power of Time and Compound Interest: Your Supercharged Savings Account 

Now, let's say you put in a lakh rupees every month at an annual return of 12 percent. By the end of 10 years, you would have accumulated your investments and earned interest on that interest and snowballed your corpus to a whopping Rs 2.14 crore!

That is the magic of compounding, which Albert Einstein often referred to as the "eighth wonder of the world." The earlier one starts, the longer his money grows exponentially.

Just imagine your money magically multiplying. Yes, that's the magic of compound interest! But really, how does that work? Let's break it down into some calculations: Here is what the number looks like for an amount you need to invest every month for the next 10 years to meet a corpus of ₹10 crore, assuming different average annual returns.

• 15% return: 15% per annum is an aggressive but still rather possible target of return on a well-diverted portfolio, including equity mutual funds. Assuming 10 years to reach a corpus of ₹ 10 crore, you will need to invest ₹ 1.3 lakh every month using the Systematic Investment Plan mode.

Calculation:

Present Value (Amount you need to invest) = Future Value (₹10 crore) / (1 + Return Rate)^Time Horizon

Present Value (P) = ₹10 crore / (1 + 15/100)^10

P = ₹10 crore / 2.441

P ≈ ₹4.09 crore (Total investment over 10 years)

Monthly Investment (SIP) = Total Investment / Time Horizon (in months)

Monthly Investment = ₹4.09 crore / 120 months

Monthly Investment ≈ ₹1.3 lakh

• 12% Return: This is a modest target that can be set for a balanced portfolio of equity and debt instruments. The monthly investment needed to be made through SIPs of ₹1.8 lakh to reach ₹10 crore at the end of ten years.

Calculation:

Monthly Investment (SIP) = ₹10 crore / (1 + 12/100)^10 / 120 months

Monthly Investment ≈ ₹1.8 lakh

Remember that these are just examples. The actual amount of money you will be investing is completely up to you and, of course, the level of risk you are willing to accept and the specific investment options you will have chosen.

• The Lumpsum Legend: Have you received a bonus or have some windfall? Consider ₹3.9 crore as a lump sum investment into well-researched funds of Equity and Debt. Leverage the power of compounding from day one.

Investment Avenues to Consider

Here are some investment options that can potentially generate the returns mentioned above:

Equity Mutual Funds: Invest in well-diversified equity mutual funds of a wide market index or specific sectors.

Individual Direct Stocks: Individual stocks, when picked through seasoned investors, show high growth potential with a higher-than-average risk.

Angel Investing: Investing in promising start-ups at the early stage, high potential returns, but needs huge due diligence and high-risk tolerances.

Real Estate Investment Trusts (REITs): Invest in a portfolio of income-generating commercial properties through REITs.

Disclaimer: Past performance is not necessarily indicative of future results.

Beyond the Numbers: Building Your Investing Arsenal

Remember, there is a lot more to an investment strategy than just the numbers. Some added tips include:

Budgeting is Your BFF: Keep a tab on income and expenses more ruthlessly. Each penny saved is a penny you get to invest! Check on budgeting methods like the 50/30/20 rule.

Automate Your Investments: Set up SIPs or recurring deposits to curb the temptation to spend.

Embrace the Power of "No": Just because your income grows doesn't mean you let your spending grow too.

Investing is a Marathon, Not a Sprint

Building up a corpus of 10 crores will require the dedicated discipline of investing in various assets. The market is bound to have fluctuations, so don't get into panic selling! Be invested in the market for the long haul and don't allow your emotions to mess with your decisions because it's the little small consistent investments that make way for big rewards.

Keep track of changes in the investment landscape. Follow fresh market trends, changes in tax laws, and new investment opportunities. Indeed, power is knowledge in finance.

Are you ready to take your inner investor guru out and play with it? With the right strategy and commitment to long-term investing, a 10 crore corpus is not just a dream but very much possible. Remember, one rupee invested today is worth a thousand miles – so invest and start compounding your wealth!