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I need a corpus of 1 crore within next 10-12 years. How much should I invest per month and where with tax free maturity?

I can take high risk in investment. I started investing through Phonpe platform in Mid Cap, Small Cap, Large Cap, Sectoral and thermatic fund, Diversified funds, etc

Raj

To build a corpus of Rs. 1 Crore in 10 years, you will have to invest Rs.50,000 per month if we assume the post-tax return of 10% p.a. If you want to build the same in 12 years, then you will have to invest Rs. 37,000 per month. Your plan of investing in Equity Diversified Mutual Funds to achieve this target is correct and you can consider the following funds that have done well across different market cycles to take care of this goal.

HDFC / ICICI / SBI Nifty Index Fund (20%)

Parag Parikh Flexicap Fund (20%)

UTI Flexicap Fund (15%)

Mirae Asset Large Cap Fund (15%)

Canara Robeco Emerging Equities Fund (15%)

DSP Mid Cap / Axis Mid Cap (15%)

The reason for suggesting six funds is to reduce overexposure in any particular fund and to keep the portfolio diversified across market capitalization. It is better to avoid Sectoral and Thematic Funds as these funds are more cyclical and carry additional risk.

Usually, for long term goals, it is better to follow de-risking strategy where you gradually start withdrawing the accumulated amount every month a year before your goal. This can be done by doing a Systematic Withdrawal Plan (SWP) in all your funds. You too can plan to invest up to the end of the ninth year and start SWP from the first month of the tenth year. If you plan to follow this strategy, then you will have to do SIPs of Rs. 56,000 every month for nine years. If you plan to target the goal in 12 years, then you can do the SIPs of Rs.41,000 for 11 years and then start withdrawing from the first month of the twelfth year.

Answer by Harshad Chetanwala, founder MyWealthGrowth.com

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