How To Earn One Crore in 5 Years?

Earning 1 crore in five years is a big financial goal for an average Indian citizen. It requires a considerable amount of effort, discipline, and smart investing. With proper investing techniques, a person can earn 1 crore in 5 years. This article explores various options to invest to earn 1 crore in 5 years.

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How to Earn One Crore in 5 Years? 

Every trade has its tips and tricks that make achieving targets easy. Similarly, earning 1 crore in 5 years requires an investor to actively manage and track their portfolio. Besides, some basic tips can come in handy for all. 

Let us look at some pointers that can help you get closer to your goals:

  1. Start Early and Save Regularly

    The key to building wealth is to start early and save regularly. The earlier you start, the more time your money has to grow. Start by setting a budget and cutting unnecessary expenses. Save at least 20-25% of your income each month and invest it in a high-return investment plan.

  2. Invest in Equity Mutual Funds

    Equity mutual funds have the potential to generate high returns over the long term. They invest in a diversified portfolio of stocks, which reduces the risk of loss. It is essential to choose the right mutual fund scheme based on your investment goals and risk profile. Do thorough research and consult a financial advisor before investing in mutual funds.

  3. Increase Your Monthly Contributions

    Increasing your monthly contributions towards your retirement corpus can help you reach your goal faster. You can start with a small increase and gradually raise the amount over time.

  4. Invest in Fixed Deposits and Bonds

    Fixed deposits and bonds are low-risk or debt investment options that provide a fixed rate of return. They are ideal for conservative investors who want to preserve their capital while earning a steady income. It is essential to choose a reputed bank or financial institution that offers a competitive rate of return.

  5. Patience is the Key

    Building wealth takes time and requires commitment and patience. It is essential to stay focused on your investment goals and stick to your investment plan. Do not get swayed by short-term market fluctuations and stay invested for the long term. Keep monitoring your investments regularly. 

Best Investment Options in India

Let's dive deeper into different investment options currently available in India that can potentially help you earn 1 crore in 5 years.

  1. Equity Mutual Funds

    Equity mutual funds invest in a diversified portfolio of stocks, which have the potential to generate high returns over the long term. Several mutual fund companies in India offer various equity mutual fund schemes in the form of SIP

    Some of the popular ones are:

    • HDFC Mutual Fund

    • ICICI Prudential Mutual Fund

    • SBI Mutual Fund

    • Kotak Mahindra Mutual Fund

  2. Real Estate

    Real estate investment requires a significant amount of capital, but it can be a lucrative long-term investment. You can invest in rental and commercial properties, or even REITs (Real Estate Investment Trusts).

  3. Stocks

    Investing in stocks can be a risky but rewarding investment option. You can invest in Bluechip stocks or Top 100 stocks, depending on your risk appetite and investment goals. 

    Popular companies in India with a strong financial track record are:

    • Reliance Industries Limited

    • Tata Consultancy Services Limited

    • HDFC Bank Limited

    • Hindustan Unilever Limited

    • Infosys Limited

  4. Fixed Deposits and Bonds

    Fixed deposits and bonds are low-risk investment options that provide a fixed rate of return. 

    Popular banks and financial institutions that offer fixed deposits and bonds in India are:

    • State Bank of India

    • ICICI Bank

    • HDFC Bank

    • Axis Bank

    • Bajaj Finserv

  5. Gold

    Investing in gold can be a safe haven as it has been known to provide a hedge against inflation and economic uncertainty. You can invest in physical gold or gold ETFs (Exchange Traded Funds). 

    Some of the popular gold ETFs in India are:

    • HDFC Gold ETF

    • ICICI Prudential Gold ETF

    • Kotak Gold ETF

  6. Cryptocurrencies

    Cryptocurrencies have emerged as a new asset class that has the potential to generate high returns. However, investing in cryptocurrencies comes with the highest risk and requires thorough research along with a sound investment strategy. 

    Popular cryptocurrencies in India are:

    • Bitcoin

    • Ethereum

    • Solana

    • Dogecoin

    • Binance Coin

  7. Tax-saving Instruments

    Tax-saving instruments can help you save money and invest more. You can take advantage of tax deductions and exemptions by investing in tax-saving instruments such as ELSS (Equity Linked Saving Scheme), PPF (Public Provident Fund), and NPS (National Pension System). 

    Some of the popular tax-saving schemes in India are:

    • Axis Long Term Equity Fund

    • SBI Magnum Tax Gain Scheme

    • HDFC Tax Saver Fund

    • Public Provident Fund

    • National Pension System

How to Maximize Savings and Reduce Expenses?

Maximizing savings and reducing expenses are two crucial components of achieving any financial goal, including earning 1 crore in 5 years. While increasing income is an important aspect, it is equally important to keep a check on expenses and save as much as possible.

Here are some ways to maximize savings and reduce expenses:

  • Create a budget: The first step towards maximizing savings and reducing expenses is to create a budget. List down all your sources of income and expenses and identify areas where you can cut down on unnecessary expenses.

  • Avoid impulsive purchases: Impulsive purchases can lead to unnecessary expenses and a waste of money. Try to avoid buying things that you do not need or that do not fit into your budget.

  • Reduce debt: High-interest debt can be a major drain on your finances. Try to reduce debt as much as possible, especially credit card debt. Use credit cards wisely and pay off the balances in full every month to avoid paying high-interest charges.

  • Plan for future: Plan for the future by saving for emergencies and investing for the long term. This will help you achieve your financial goals and provide a cushion for unexpected expenses.

Common Mistakes To Avoid

Mistakes to avoid when aiming to earn 1 crore in 5 years:

  • Failing to create a concrete financial plan, which includes a specific target, timeline, and detailed steps to follow.

  • Investing in the wrong instruments or making rash investment decisions, which can lead to losses and setbacks.

  • Underestimating the amount of time and effort required to start and grow a successful business or side hustle.

  • Overspending and failing to maximize savings by not creating a budget, reducing expenses, and increasing income.

  • Failing to stay disciplined and patient as investing requires consistent effort, dedication, and avoiding impulsive decisions.

Remember to revisit your financial plan regularly to get the best returns. Create a monthly budget for your routine expenses and stick to it.

Final Thoughts 

Earning 1 crore in 5 years is an ambitious goal that requires careful planning, hard work, and discipline. With a clear financial plan laid out, exploring the best investment options is the next step. While it may not be impossible, it is not equally easy either to earn 1 crore in 5 years. New income sources and disciplined investment only help make it possible.

Past 5 Year annualised returns as on 01-05-2024

^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.

Tax benefit is subject to changes in tax laws. Standard T&C Apply
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^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

#The lumpsum benefit is calculated if policyholder invested ₹10000 monthly for 10 years in the fund with a policy term of 20 years. This Point To Point past performance data of last 10 years has been used to illustrate a scenario for the customers benefit. It is assumed that the past 10 years returns would have also been delivered in last 20 years. This is not guaranteed and not in anyway indicative of what the customer may actually get 20 years from now. The investment is subject to market risk and the risk is borne by the policyholder.

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