If you can take some risk in investment then it will not be difficult for you to build a corpus of Rs 1 crore in 10-12 years. Financial planning experts say that if you want to reach a corpus of Rs 1 crore in 10 years, you need to invest Rs 50,000 per month with an estimate of 10 per cent per annum return after tax.
If you want to build the same fund in 12 years, then you will need to invest Rs 37,000 per month.
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For this you can invest in Equity Diversified Mutual Funds. You can consider these funds that have performed well in different cycles of the market.
HDFC / ICICI / SBI Nifty Index Fund (Return 20 percent)
Parag Parikh Flexicap Fund (Return 20%)
UTI Flexicap Fund (Return 15 percent)
Mirae Asset Large Cap Fund (Return 15 Percent)
DSP Midcap / Axis Midcap (Return 15 percent)
The reason for recommending these funds is to avoid over-investment in a single fund and diversify the portfolio. It would be better to avoid sectoral and thematic funds as these funds carry high risk.
Generally, for long term goals it is better to reduce the risk and for this you start with withdrawing some of the deposit every month before reaching the target. For this, you can choose Systematic Withdrawal Plan (SWP) across all funds.
Investment up to the ninth year and SWP can start from the first month of the tenth year. If you follow this strategy, you will have to do a SIP of Rs 56,000 every month for nine years. If you want to complete your target in 12 years then you need to do SIP of Rs 41,000 every month for 11 years and withdraw from the beginning of 12th year.
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