Assuming retirement age to be 60, following are two ways to accumulate 5 CR in 31 years which are purely ethical and legal.
- Investing in Debt Instruments (Fixed Deposit or Recurring Deposit): Assuming an average rate of interest of 6.5% over the period of 31 years. If invest a lump sum amount, you need to invest ~ Rs. 71 Lakhs. Same can be achieved with a monthly investment of ~Rs. 43,300/- for 31 years.
- Investing in Equity Instruments (Stocks or Equity Mutual Funds): Assuming an average rate of return of 15% (not guaranteed), a lump sum investment of Rs. 6.5 Lakhs. Same can be achieved with a monthly investment of Rs. 7,700/- per month for 31 years.
Approach 1 vs Approach 2: Bank deposits are much safer as compared to stocks or equity mutual funds. Stocks and equity mutual funds are subject to market risks. There is no guarantee on your returns. But, to get higher returns, risk needs to be taken.
Typically, you will have a mix of Debt and Equity investments in your portfolio to accomplish your goal which depends on your risk taking appetite. It’s best to consult a professional financial planner to make such kind of investments, as apart from doing the calculations, you also need to determine your risk taking appetite and which stocks or mutual funds to invest in which can yield the desired return.
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