To achieve a corpus of Rs 1 crore, sticking to safe investments like NSC and FD may not be enough, particularly if you didn’t start saving well early on in your life. Relying entirely on equity too has its risks. Mutual funds offer a balanced avenue towards harnessing market growth while maintaining expert control over the investments. Besides, with easy SIPs, you can easily invest in mutual funds online.
Here are five ways how you can accumulate Rs 1 crore through mutual funds.
Choose your mutual funds wisely
There are hundreds of mutual fund schemes to choose from, across dozens of categories. You have to compare and consider a variety of factors while selecting mutual funds. The performance of the fund and its average returns in recent times and the long-term are compared. The expense ratio of the fund and the brokerage charges of the fund house will also influence your choice. There are entry and exit loads on mutual funds, which again are expenses you will need to bear. The investment style of the fund manager should match your risk appetite and financial goals. Considering these factors helps you to make a smart choice.
The early bird catches the million
Thanks to the power of compounding, the trick is not in saving a lot of money but in starting early.
A 30-year-old will end up accumulating Rs 1.13 crore by the time they are 60 if they save Rs 5,000 per month through SIP, assuming a 10% rate of return. While a 40-year-old will accumulate Rs 38 lakhs by the time they are 60, at the same rate of return and SIP contribution. By starting early, the 30-year-old will accumulate three times more wealth. The SIP contribution in the additional 10 years is a mere Rs 6 lakhs. That’s the power of compounding for you.
Go for SIP
We have already seen what an early SIP can do. But SIP is also important to maintain financial discipline. Wanting to accumulate Rs 1 crore is one thing. But ensuring consistent savings for months and years is not easy. SIP ensures this consistency.
Maintain your risk exposure
You have to identify your risk appetite and base your investments around it. If you fiddle around too much with the risk exposure, you may slow down your returns with low-risk investments or suffer losses in high-risk ventures.
Maintain your finances
All the above planning is meaningful when you constantly increase your income and savings. If you want to save aggressively, you should look to reduce your expenses as well. If you can increase your contribution to your mutual funds online with time, you can even break the Rs 1 crore barrier and go higher.
Conclusion
You may already be using a vetted investment app to track your investments and select your mutual funds. Many investment apps will also help you set a financial goal, thus making a realistic plan to achieve it in time. You can access all your investments in one place with Tata Capital Moneyfy app and track your investments easily
