Ask Money Today: Can I accumulate Rs 5 crore in 13 years?

I am 27 years old, working in an IT firm. I earn around Rs 1 lakh per month. I have started to invest in mutual funds in the last year. I am investing Rs 3,500 per month each in Parag Parikh Flexi Cap Fund and Mirae Asset Large Cap Fund. I can further invest Rs 30,000 per month in equity funds. Which three to four schemes should I invest in? I want to create a corpus of Rs 5 crore by the time I reach 40 years of age. Is my investment sufficient to create my desired corpus?

-JS

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By Raghvendra Nath, MD, Ladderup Wealth Management

Both your choice of funds have performed well in the recent past with one of them having benefit of exposure to global equities. To achieve the corpus of Rs 5 crore with monthly SIP of Rs 37,000 for 13 years, you will need annual return of approx. 27 per cent, which in my opinion achieving is a tall task. With current SIP of Rs 37,000 per month, by the age of 40 you will accumulate corpus of around Rs 1.3-1.5 crore, assuming returns of ~12 per cent. To achieve your required corpus, either you will need to increase your monthly SIP to Rs 1.34 lakh or go aggressive in your investment strategies, which will increase volatility in your portfolio. If above two options are not viable then you need to lower your corpus requirement as it is not achievable in the current scenario. If this corpus is for your retirement or achieving financial freedom, I then recommend you to consult a financial advisor to understand your corpus requirement based on your income and expenses and plan your investments accordingly.

(Views expressed by the investment expert are his/her own. E-mail us your investment queries at askmoneytoday@intoday.com. We will get your queries answered by our panel of experts.)

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