I am 34 years old and would like to build a corpus of 1 crore by the time I turn 50. Please guide me on how and where to invest. Also, how much do I need to invest to reach my goal?

-Alby Jose

You will be surprised to know that to achieve a target of 1 crore, you need to save 15, 000 per month or 1.80 lakh per annum and the assumptions we have taken are reasonably moderate.

Does this sound easy? But what typically gets missed out by everyone is the consistency and the habit of saving which needs to be brought in. It is easier said than done. In your case, you need to save regularly for 17 years, or 204 months.

Coming to the actual number crunching, it is assumed that your savings will grow by a modest 5% every year. In other words, 1.80 lakh saved in the first year will become 1.89 lakh in the second and 1.98 lakh in the third year and so on. The average interest earned is taken at 10% over the entire duration. Based on the same, you will have a corpus of 1.09 crore when you are completing 50 years of age.

Now we come to the question, on how you need to invest this money. Since the savings will be done with a long-term view, you need to consider equity as an asset class, where the best way to invest is through mutual funds.

You can invest in four funds and the asset classes can be multi-cap, mid-cap and balanced funds. The fourth category should be gold, which can be 10% of the total amount invested. The funds you can pick from the multi-cap category are HDFC Equity, DSP BlackRock Equity. In the mid-cap space, you can choose between IDFC Premier Equity and HDFC Mid Cap Opportunities. In the balanced fund category, HDFC Prudence, HDFC Balanced and Birla Sun Life 95 are good funds to choose from.

For investment in gold, consider gold exchange-traded funds. In case you don’t have a demat account, you can consider gold funds, including Reliance Gold Savings Fund and Kotak Gold Fund.

At the same time, make sure you are adequately protected for both your life and health and have insurance for the same. For life insurance, go for a term plan. Even if means spending a few thousand more every month, the money is wisely spent as the same gives protection to your financial plan.

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