How To Build a ₹10 Crore Corpus in 20 Years or Less? | Detailed Financial Plan | How to Build Wealth

Building a 9 figure investment corpus is a dream for every investor. So in this video, we explore multiple paths that can help an investor realize the dream of building a 10 Crore corpus.

Topics Covered:
00:00 Introduction
01:28 LET MATH SHOW THE PATH
05:35 A SIP IN TIME GETS US A NINE (FIGURE CORPUS)
11:27 SOME IMPORTANT CONSIDERATIONS


👉 LET MATH SHOW THE PATH
A number like 10 crores might feel a little daunting at first but much like any plan, a financial target often comes to three things -
1. the initial investment or starting capital
2. The annual returns
3. The duration
So one way of looking at this 10 crore target is to figure out the initial capital one needs and the annual returns one needs to achieve over the next 20 years
For example. if you have 10 lakhs of investible surplus .. then an annual return of 26% for the next 20 years .. will take you to 10 crores
And if you have a higher initial capital which we think our 40-year-old investor will have. The initial capital can be a good starting point.
Now, remember our 40-year-old investor, like many others has investments in fixed deposits, PPF, and life insurance policies all of which are probably delivering between 5 to 7 percent returns
Sources of initial investments:
PPF - started a PPF account when he or she first started working and was maxing out the contributions The PPF account balance would be very close to 30 lakh rupees. These can be put to better use in achieving our 10 crore goal by moving this amount to ELSS funds which is likely to give better returns over the next 20 years and also offer 80C tax benefits
Bonus - about 12-15% of the CTC
Fixed deposit
A one-time zero-interest loan from your parents

👉 A SIP IN TIME GETS US A NINE (FIGURE CORPUS)
Building a nine-figure wealth corpus needs discipline and perhaps, the most effective way of doing that via the SIP route.
Now, some pretty interesting SIP-related thumb rules can serve our purpose .. but one thumb rule that often comes up in many discussions .. is what is known as the 15-15-15 rule. So what this rule says is that. if you start a monthly SIP of 15,000 rupees .. you continue this SIP for 15 years and if the mutual fund or the asset achieves an annualized return of 15% then that will get you a corpus of 1 crore at the end of those 15 years.
But when we convert it into a 15-15-30 rule which means 15,000 rupees at 15% but in this case, we extend the time to 30 years. And by doing this we allow the magic of compounding to take over and what would have been 1 crore per the 15-15-15 rule now becomes a corpus of 10 crores by using the 15-15-30 rule

https://www.etmoney.com/tools-and-calculators/sip-calculator

In a more practical sense, investments in SIPs are rarely static which means most investors tend to increase the number of SIPs over time. This is also called stepping-up your SIPs which in simple language means increasing the amount you invest every month
For instance, we just figured, that to reach 10 crores we can set up a monthly SIP of 1 lakh rupees for the next 20 years at an assumed annual return of 12%.
A combination of the lumpsum approach and the SIP approach makes the task of achieving a high number like 10 crores a lot more doable. In our view, this combination of an initial lump sum plus the use of annual bonuses and a monthly SIP can go a long way in helping investors build a multi-crore wealth corpus

👉 SOME IMPORTANT CONSIDERATIONS
When approaching long-term wealth-building many investors tend to miss out or even ignore some important elements.
Instruments of Investing: The choice of assets and funds will be more geared towards carving an aggressive portfolio of at least 80% of the money going into equities. it’s also important to keep this portfolio away from speculative asset classes like bitcoins which have shown periods of spectacular gains and agonizing losses
Near Goals Completion shifting Corpus from equities to fixed-income instruments: In our example, we had taken a 12% yearly return throughout our simulations. But a better way of making this plan would have been to aim for
First 17 years - 13% p.a.
Last 3 years - 7-8% p.a.

Factored inflation or taxes: the long term capital gain is 10% and for inflation, you can use 6%

👉 Resources:
ETMONEY Calculator - https://www.etmoney.com/tools-and-calculators/sip-calculator
Excel Calculator - https://cdnblog.etmoney.com/wp-content/uploads/2021/07/ETMONEY_10_Crore_Calculator-1-1.xlsx

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