How To Make Rs 10 Crore In 20 Years Through Investing (2024)

Reaching Rs. 10 crore in 20 years is not impossible, but it does not come very quickly either. To get your name into the Rs. 10 crore club, you need to first prepare a sound financial plan and then follow it in a disciplined manner. After all, becoming a multi-crorepati is a dream of many, but achieved by only a few.

To help you out with the planning part, in this blog, we will lay out multiple paths to reaching this Rs. 10 crore destination in 20 years. The idea is to ignite multiple possibilities and let you select the best possible way based on your comfort level.

Option 1 – Lumpsum Investment To Build Rs. 10 Crore

Preparing a plan to build Rs. 10 crore in 20 years may seem like a daunting task. But much like planning for any financial target, you will need to find out three things.

One, the initial investment or starting capital. Two, the annual returns. And thirdly, the duration, which in this case is 20 years.

So, one way of planning for this Rs. 10 crore target is to figure out the initial capital and the annual returns you would require to achieve over the next 20 years.

For example, if you have Rs. 10 lakh of investible surplus, then an annual return of 26% for the next 20 years will take you to 10 crores. Similarly, if you have Rs. 25 lakh as your starting investment, you will require a 20.3% annual return over the next 20 years to reach Rs. 10 crores.

While the math is simple, the challenge remains in the possibility of getting a 20% or a 25% annual return every year for the next 20 years. You only see such stunning returns during a market rally, and it seems almost impossible to get such returns consistently over the next two decades.

Nevertheless, if history is our guide, such returns are not unprecedented. As many as 19 Indian mutual fund schemes have delivered an average annual return of 20% over the last 20 years. And these are all Regular Plans. Had these been Direct Plans, that is probably an additional 1-1.5% lift in returns.

So, if you have luck on your side, your mutual fund scheme may deliver such fantastic returns in the long run. But you should not rely that heavily on being lucky. Instead, a prudent strategy would be to control what you can control, i.e., starting with higher initial capital.

Arranging The Initial Corpus

It is pretty unlikely that you will have Rs. 10 lakhs or Rs. 25 lakh just lying in your bank account. So, you need to consolidate various investments like FDs, PPFs, etc., that offer you 5-7% return. Because such returns are way lower than what you need to accumulate Rs. 10 crore in 20 years, after consolidating, invest this amount in goodEquity Fundsthat can deliver double-digit returns in the long run.

For instance, if 40-year-old Karthik started a PPF account when he joined his job at the age of 25, the maximum contribution he would have accumulated in the last 15 years would be close to Rs. 30 lakh.

And since Karthik can withdraw from the PPF account after a 15-year lock-in, these 30 lakhs can be put to better use in achieving the Rs. 10 crore goal by moving this amount to an ELSS fund.Investing in an ELSS fundis likely to give better returns over the next 20 years and continue to offer Section80C tax benefitsavailable for PPF.

In addition to PPF, another source of your starting capital can be the annual bonus that most salaried employees receive once a year. This bonus is, on average, about 12-15% of the CTC. And depending on your salary, it can be a few thousand rupees or a few lakhs of rupees. Whatever the amount, it should not be ignored because every bit counts.

The idea here is to look at what you have and ensure that you can dedicate some lumpsum amount for the next 20 years. This can, in turn, accumulate to the entire 10 crores or at least a big part of it.

Option 2 – SIP To Make Rs. 10 Crore

Building a nine-figure wealth corpus needs discipline. And perhaps, the most effective way of doing that is to invest through the SIP route.

ASIP or systematic investment planis a technique that requires investors to contribute a fixed amount of money at a predefined interval. And even relatively small SIP investments in Mutual Funds made over the long term can grow your wealth significantly.

Some SIP-related thumb rules can guide you to make a plan for creating an Rs. 10 crore corpus. One such thumb rule is known as the 15-15-15 rule.

This 15-15-15 rule says that if you continue a monthly SIP of Rs. 15,000 for 15 years, and the mutual fund scheme achieves an annualized return of 15%, then that will get you a corpus of Rs. 1 crore at the end of those 15 years.

In simple words, Rs. 15,000 a month for 15 years at 15% can give you Rs. 1 crore.

A slight modification to this 15-15-15 rule can also be handy. For instance, if you convert this rule into a 15-15-30 rule, i.e., Rs. 15,000 at 15% in 30 years, you can accumulate a corpus of Rs. 10 crore. So, if you are in your 20s or 30s, then do explore giving yourself a longer runway to achieve all your financial goals and never underestimate the importance of disciplined investing using the SIP approach.

Nevertheless, the plan here is to accumulate Rs. 10 crore only in 20 years. And secondly, you cannot pin our hopes on equities delivering an annualized return of 15%, 20%, or 25%.

So the way forward is to examine a range of possibilities based on different periods and annual returns. This can then help us determine the right SIP amount needed to contribute each month.

For instance, if you keep a more conservative estimate of 12% on equities over 20 years, you would need to keep aside precisely Rs. 1 lakh rupees every month to reach the target of Rs. 10 crore.

Similarly, a more conservative investor banking on a 9% yearly return would need to set aside close to Rs. 1.5 lakhs every month to reach the Rs. 10 crore goal.

In fact, if you want to play around with these scenarios, then simply head toour SIP calculator.

Option 3 – Increase SIP Amount Periodically

In a more practical sense,investments in SIPsare never static. Most investors tend to increase the SIP amount as their income grows over time. This is also called stepping up your SIPs, which in simple language means increasing the monthly SIP amount every year. This way, you can start with a smaller amount and still reach the target by increasing the investments gradually over the course of the investment duration.

For instance, to reach Rs. 10 crore, you need a monthly SIP of Rs. 1 lakh for the next 20 years at an assumed annual return of 12%. But if you don’t have Rs. 1 lakh to invest at this point, the Rs. 10 crore target can still be obtained by starting almost halfway at Rs. 55,000. And then increase the contributions by 10% every year.

Another way is to start at just Rs. 20,000 and increase the yearly contributions by 22%. But this can be immensely challenging a few years down the line. Anyway, there are many combinations that can be explored, and every option will have its own set of challenges and perhaps sacrifices that you might have to make.

Option 4 – Combination Of SIP And Lumpsum

A combination of the lumpsum approach and the SIP approach makes the task of achieving a high number like Rs. 10 crore a lot more doable.

Let’s look at this from a numbers perspective.

For example, say, we had a starting capital of Rs. 10 lakh. Now the wealth generated from this Rs. 10 lakh when compounded over 20 years is almost equal to you putting up Rs. 10,000 every month for the next 20 years. This means that instead of having to pay a lakh per month, a lower SIP of Rs. 90,000 can help you reach your target.

Likewise, if the initial lump sum corpus is higher, say, Rs. 30 lakhs or Rs. 50 lakh, then the monthly SIP amount would continue to go down.

Therefore, this combination of an initial lump sum plus the use of annual bonuses and a monthly SIP can go a long way in building a multi-crore wealth corpus. To help you with various combinations and find out your comfort zone, we have created asimple downloadable calculator in excel. So, download the excel sheet and play around with the options to find the right combination for yourself.

Dos And Don’ts While Building Rs. 10 Crore Corpus

When approaching long-term wealth building, many investors tend to miss out or even ignore some essential elements.

The first area relates to the instruments that one should be investing in. Since 40-year old Karthik has a tight 20-year runway, the choice of assets and funds will be more geared towards carving an aggressive portfolio of at least 80% of the money going into equities.

While this 80% allocation to equity would attract a decent level of volatility in the portfolio, it is also the most tried and tested approach to achieving a 12% or more return on investment. It is also essential to keep this portfolio away from speculative asset classes like cryptocurrencies which have shown periods of spectacular gains and unbearable losses.

The second element you need to consider in the planning process is that as your corpus comes closer to your Rs. 10 crore goal, you will be prudent in shifting a large part of the corpus from equities to fixed-income instruments.

In the above examples, a 12% yearly return has been taken throughout the illustrations. But a better way of making this plan would have been to aim for 13% for the first 17 years and then temper down the expected returns in the last three years to a much lower rate of 7% or 8%.

The calculator we have provided does give you a provision for inputting a different expected return for the first 17 years and a different expectation for the last 3 years. So, do check various combinations like 13%-7%, 14%-6%, and so on.

The third major element that you need to consider is that we have not factored inflation or taxes anywhere in these simulations. And the reason for not having that in this blog was to keep the planning process as simple as possible.

However, if you are keen on incorporating those factors, then remember the long-term capital gain is 10%, and for inflation, you can use 6%.

Bottom Line

To sum up, the entire focus of this blog is to give you investment plans and strategies that will help you build a sizable corpus in the long run. The Rs. 10 crore amount was taken as a proxy. Suppose you want to create a plan for a different number like Rs. 5 crore, Rs. 15 crore, or any other number for that matter. In that case, you can easily create an investment plan using the same investment ideas mentioned in this blog: Start with a significant lump sum investment and then continue your SIP investments in a disciplined