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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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:
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.
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.
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.
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.
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.
Let's dive deeper into different investment options currently available in India that can potentially help you earn 1 crore in 5 years.
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
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).
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
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
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
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:
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
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.
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.
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 10 Year annualised returns as on 01-12-2023
^Tax benefit are for Investments made up to Rs.2.5 L/ yr and are subject to change as per 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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