How many years will it take for a 35-year-old investing Rs 25K monthly to achieve a Rs 1 crore wealth creation goal?

With a monthly income of Rs 1 lakh, I manage to save Rs 25,000 after covering all my expenses. I prefer not to increment my SIP annually, considering potential rises in liabilities. I'm interested in understanding the timeframe required to accumulate Rs 1 crore with my current saving approach. 

Reply by Harsh Gahlaut, Co-founder & CEO, FinEdge 

At the age of 35, embarking on the journey of investments becomes crucial, as it is a pivotal stage in both life and career, and the significance of financial security could not be more important. Since there is age on one’s side, taking informed risks should remain a cornerstone of investing. Hence, we would recommend that the amount of monthly savings be directed to an equity Mutual Fund in a staggered manner (Systematic Investment Plan). 

An elementary calculation for a monthly investment of Rs. 25,000 suggests a 13-year horizon for accumulating Rs 1 crore, assuming a 13% annualised return. However, it is important to understand that wealth creation is not as easy as this mathematical calculation. Returns from equity are never linear and the markets will test your resilience from time to time.  

Accumulating this amount over a long period of 13 years without falling prey to one’s own behavioural biases is a constant challenge one faces in the journey towards wealth creation. ‘Greed’ and ‘fear’ have often been seen as triggers for irrational investment decisions during long investing tenors. Hence, before you plan to start investing you must undergo a detailed investing process that takes into account your cash flows, defines your purpose or goal for which you want to invest and takes into account your investing beliefs. Purpose gives you direction and your goals provide resilience, essential for sustaining long-term investments and harnessing the power of compounding.  Investing without clear goals is like sailing without a compass in unknown waters. 

 In the digital age, the transactional ease of investing has been simplified, however, that does not guarantee 'investing success’ thereby making it even more crucial to follow a process that keeps your investing requirement at the forefront. 

In a nutshell, to aid the accumulation of that sizeable corpus of 1 crore it is important to have a disciplined goal-centric approach, the right investing behaviour, and rational expectations from investments. Remember that investing is not a sprint but a marathon, and success is often the result of consistent and disciplined efforts over a long investing period. 

(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.)