I’m 38 and can save Rs 30,000 per month. How many years will it take me to become a crorepati?

I am 38 years old. I am investing Rs 3 lakh per year in PPF under my wife’s and my name, and the total amount accumulated is nearly Rs 17 lakh, and it matures in 2033. However, I also have equity investments worth nearly Rs 22 lakh, which is giving me a return of 25 per cent so far total of Rs 28 lakh value, mostly invested in BeES, Nifty BeES, bank BeES, Nasdaq N100, junior BeES, gold BeES and IT BeES. I can save Rs 30,000 a month. Kindly guide how many years it will take me to be crorepati.  

Reply by Mayank Bhatnagar, Chief Operating Officer, FinEdge. 

First off, congratulations on setting up such a balanced long-term wealth creation plan. You have smartly combined a low-risk investment like a Public Provident Fund (PPF) with aggressive investments into equity-oriented ETFs and are also investing with a clear target in mind of becoming a crorepati. 

A back-of-the-envelope calculation answer to your “crorepati” question would be: between five and six years from now. At this point, your PF balance would be close to Rs 34 lakh (assuming the current 7.1 per cent return). Your existing equity investment of Rs 28 lakh could have grown to about Rs 46 lakh, and your monthly investment of Rs 30,000 would have added another Rs 22-23 lakh to your corpus. The return assumption for equities has been taken as 11 per cent, because you seem to have invested in a mix of large-cap, international and gold ETF’s. Unfortunately, your present CAGR of 25 per cent is a short-term aberration. You can reasonably expect this number to come down over time and settle at 11-12 per cent for your current portfolio. Please do rationalise your return expectations from equities, as this will be a key determinant in the success or failure of your investment plan. 

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Given that you are still young and have many earning years ahead, you may want to consider directing your SIPs towards more aggressive, potentially high-growth funds like small-cap and mid-cap funds. ETFs do not usually offer a SIP option, and this could impact your investing discipline if you need to invest Rs 30,000 every month manually. However, please familiarize yourself with the risks and rewards of these funds before you invest. 

There are a few other things to keep in mind. Equity returns are non-linear and are impacted in the short term by a number of unpredictable factors. You do not need to worry about this too much since you are 38 years old and probably have a long-term investment horizon. However, you do need to keep in mind that in the end, your crorepati goal achievement date will depend upon market movements. Please do not attempt things like market timing, cutting or losses, frequent profit booking/fence-sitting, etc., to accelerate your goal, as these would surely derail your investing journey! Remaining invested with resilience and discipline through the ups and downs of the markets is the only success formula. The support of a qualified investment expert who will map your goals, track your progress, and guide you along the way can also be helpful. 

(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.)