Wise Wealth Advisors

D.Muthukrishnan (Muthu), Certified Financial Planner- Personal Financial Advisor

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I meet many people across wide spectrum of society who comes to us for personal financial advice.

One common question I come across is how to become Crorepathi (i.e.) to have One Crore worth of financial assets.

I want to provide an answer for this through page, as to how to make one crore and much more, through a simple way.

Also people, who are already wealthy, would get insights on how to multiply wealth. Not only that, people who want to manage their wealth would get an idea as to how keep pace with inflation.

If you want to become Crorepathi in 10 years, you’ve to invest Rs.37,000/- every month.

If the time span is 20 years, then the investment amount per month is only Rs.6700/- for making Rs.1 Crore. If you invest the Rs.37,000/- mentioned above for 20 years then you would have a whopping amount of Rs.5.54 crores.

If you want invest an one time amount to achieve a target of Rs.1 Crore then the investment amount is:

Rs. 25 Lakhs for investment tenure of 10 years

Rs. 6 Lakhs for 20 years

I’ve assumed an annualized return of 15% for arriving at the above numbers. Around 17% is the annualized return provided by Sensex during the last 38 years. In the past, well managed diversified equity funds have provided returns far superior to the Sensex. Please note that mutual fund investments are subject to market risks, there is no guarantee of returns and past performance may or may not be repeated in the future.

Please go through the below piece to get complete details of returns of Sensex, Fixed deposits , gold and silver through the last 37 years.


Looking at the growth prospects of Indian economy for next couple of decades, I feel that superior return from equity is possible though the ride would be very bumpy.

In order to appreciate the above numbers, you need to know the value of one crore today for the periods mentioned above. For this I’ve assumed an average inflation rate of 5%. Though inflation has varied between sub 1% to double digit percentage, I’ve assumed a future long term inflation of 5%.

Today’s value for future Rs.One crore is as follows

10 years- Rs.62 Lakhs

20 years- Rs.38 Lakhs

Any investment in equity market has to be preferably done for a minimum term of 10 years. In my opinion, an investment tenure of 20 years may make you wealthy beyond your imagination. It is the TIME in the market that is important and NOT timing the Market. There is a possibility that market may atleast go through 2 cycles in a period of 10 years. Any investment tenure lesser than that in equity may prove to be very risky. It is better to avoid equity market totally if your investment tenure is less than 10 years.

Every single SIP we receive provides us satisfaction that we are also instrumental in making investors participate in the growth story of our economy.

Not everyone is capable of lump sum investments.

But everyone is and should be capable of investing small sums every month over a long period of time.

Let me start with an example of one of the funds we recommend:

This fund has been in existence for last 270 months (as of June 30th 2017), 22.5 years. ‘Now’ refers to the above date.

If you’ve invested Rs.10,000/- every month in this fund for the last 10 years, how much would be it’s value now? Guess? It is Rs.26.86 Lakhs. Annualised return of 15.40%

You would have invested Rs.12 lakhs over a 10 year period. Capital multiplying by 2.2 times.

If you’ve invested Rs.10,000/- every month in this fund for the last 15 years, how much would be it’s value now? Hold your breath, it is Rs.96.98 Lakhs. Annualised return of 20.16%

You would have invested Rs.18 lakhs over a 15 year period. Capital multiplying by 5.3 times.

If you’ve invested Rs.10,000/- every month in this fund for the last 22.5 years, since it’s inception, how much would be its’ value now? Again you would be surprised, it is Rs.6.19 crores. Annualised return of 23.09%

You would have invested Rs.27 lakhs over a 22.5 year period. Capital multiplying by 23 times.

In all the above scenario, your capital was not invesed at one go but over a long period of time. Still you may see for yourself how much the same has grown multi-fold.

Disclaimer: Kindly note that the above illustration is based on past performance. Mutual fund investments are subject to market risks. Past performance may or may not be repeated in future. The products do not offer any guaranteed or assured returns whatsoever. Please read all the relevant documents carefully before investing.

Every family with an income of Rs.50,000/- should aspire for investing atleast Rs.10,000/- in SIP. For people who are planning for retirement, children’s education, daughter’s wedding etc. should roughly try to invest 20% of their monthly income in equity funds through SIPs.

The myth is that, timing is essential to generate high returns.

The Reality is that, it is the time and not the timing that matters

In the period 1982 to 2011, the annualized return of Sensex was 16.75%. If someone had the capacity to know as to what is the lowest level in Sensex every year (if you know some one, I would like to meet him) and invested only on that day, he would have a made an annualized returns of 17.39%.

Someone like me, who is very dumb in timing the markets, still timed it, only to end up investing in the highest level of Sensex of each year, would have made an annualized return of 16%.

Coming to sensible investors like you, who have chosen the disciplined way of investing by investing a fixed sum every month would have ended up with annualized returns of 16.71%

The difference between the disciplined investor and an excellent (non existent) market timer is only 0.68%

But tell me honestly, how many of us are capable of predicting the best day and the worst day every month or every year, that too consecutively for decades? Who can time the market to the perfection? None.  Not even the ‘Experts’ can.

We earn regularly. We spend regularly. Shouldn’t we also invest regularly?

All we need is a blend of income, time and discipline.

We’ve income and time, all we need is discipline.

The discipline of making small but regular investments.

An SIP is like operating a recurring deposit account with a mutual fund.

A method of investing regularly to benefit from the stock market volatility.

It is convenient and hassle free. Once you give a one time instruction, your account would be debited on a regular basis.

It is a forced savings. Small amount invested every month to become a huge sum over a period of time.

This is a low cost, transparent way to build your wealth.

Some people stop the SIPs when the markets go down. This defeats the very purpose of SIP, which is a method of investing to capture and mange stock market volatility. You get more units when the markets are lower. Stopping SIPs when the markets are down is self defeating.

Trying to time the market is a Fool’s game? Do you want to be one?

Most of us delay investments until the last moment. Needless to say, the longer you delay, the greater will be the financial burden on you to meet your goals. On the other hand, you would be surprised what you could achieve by saving a small sum of money regularly at an early age. Moreover, the earlier you invest, the longer your money works for you and greater will be the power of compounding.

The power of compounding underlines the importance of making your money work for you at an early age.

Suppose A & B invest Rs.10,000 every month earning interest @15% p.a. on a monthly compounding basis. A starts at the age of 25 years and B starts at the age of 35 years. Both of them invest for 5 years (Rs.6 Lakhs) and hold their investments till 60 years of age.

A ’s investment would have appreciated to approximately Rs.12 crores whereas B ’s investment would have grown to only Rs.3 crores  Thus, A ’s investment would have become four times more by just starting investing earlier than B, though the amount saved by them is the same.

Clearly, the power of compounding can have a significant impact on your wealth accumulation, especially if you remain invested over a long period of time.

In nutshell, benefits of investing in Mutual Funds through SIP are

  • Professional Management– Ensures that the best brains are managing your money.
  • Diversification–  Ensures risk reduction.
  • Low cost – No entry load. The annual expense ratio is around 2%+.
  • Liquidity– Ensures that you get back your money, whenever you want.
  • Transparent–  Ensures you are appraised of the portfolio regularly.
  • Extremely well regulated– Ensures that the fund follows laid down process.
  • Tax efficient – For equity Funds:   Dividends are Tax Free, No Long Term Capital Gains Tax, Short Term Capital gains tax of flat 15%

In your own welfare, I would sincerely suggest that you go for a long term SIP, not less than 10 years, so that you can reap the benefit of compounding.

I wish you all become crorepathis and financially independent so that you would be able to have a better quality of living.

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