Often people think that to create a fund worth crores, a huge salary is required. But the truth is that with proper planning, discipline and long term investment, even a person earning ₹ 50,000 per month can create a corpus of more than ₹ 2 crore in 20 years. What is needed is a right strategy and continuous investment. Suppose your age is 35 years and your monthly salary is Rs 50 thousand. If you want to build a big corpus by the age of 55, then let us understand its simple mathematics.
Expense control and security first
First of all, it is important that your monthly expenses remain within ₹ 35,000. That means some part of the earnings should be left for savings. Along with this, financial security is very important. Take health insurance of at least ₹ 5 lakh and term insurance of ₹ 1.5 crore. With this, the family will remain financially secure in case of any untoward incident.
Don’t forget to create an emergency fund
Before starting investing, create an emergency fund equal to 6 months’ expenses. If your expenses are ₹35,000, set aside around ₹2 to ₹2.5 lakh. You can prepare this through debt mutual fund or RD. This fund will be useful in case of job loss, illness or any sudden expense.
Smart investment of ₹15,000 every month
Now the real game begins. Invest ₹15,000 every month and divide it across different funds:
- 20% Large Cap Fund – ₹3,000
- 30% Mid Cap Fund – ₹4,500
- 40% Flexi/Multi Cap Fund – ₹6,000
- 10% Multi Asset Fund – ₹1,500
In this way your investment will be spread across different sectors and companies, which will reduce the risk.
Amazing 13% return and 5% step-up
If this investment gives an average annual return of 13% and you increase (step-up) your investment by 5% every year, then after 20 years your fund can reach around ₹ 2.13 crore. All this is the result of the power of compounding and regular investing.
small beginning, big results
A salary of ₹50,000 is not small, just the right direction is needed. If you control your expenses with discipline, take security cover and make regular investments, it is absolutely possible to create a corpus of more than Rs 2 crore in 20 years.
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