5 Replies to “I am 41. Income6 lakhs/ year.LIC premium1.2lakhs p.a. How should I invest to accumulate 50lakhs in 10 years ?”

  1. Hi,
    If you want to invest in mutual fund refer http://www.valueresearchonline.com/ and http://www.moneycontrol.com/ website. Between this two sites,
    http://www.valueresearchonline.com is really good web site.

    Keep following points in your mind before investing in mutual fund:

    1) SIPs are the Best Mode of Investing

    2) Select well rated funds, which has good track records for more than 3 years.

    3) Diversified your investment in Equity: Diversified funds (This is the best way to invest in mutual fund especially for beginners

    Mission Rs 1 Crore

    Assuming that a well rated equity fund would generate 20 per cent annual return in the coming years, your monthly investment of Rs 8,000 would grow to Rs 1.98 Crore in 20 years. However, fund selection would be the key here. Choose a fund which has proven its worth and has a good performance history.

    For tax saving funds, choose from well rated funds like Magnum Tax Gain, Birla Sun Life Tax Relief or Sundaram Tax Saver. Amongst diversified equity funds select some large cap oriented funds like Reliance Vision, Sundaram Select Focus or Birla Frontline Equity. Avoid investing in too many funds. You can choose two ELSS funds (Rs 2,500 each) and two equity diversified funds (Rs 1,500 each) to divide your total investment of Rs 8000 per month.


  2. Hi,

    50 lakhs accumulation in 10 yrs is a tough call, especially as you do not have the benefit of starting young, and, in the absence of details, I assume cannot take high risks, at this stage of your life.

    Having said that, its certainly doable in 15 years, through sound & safe investment modes, without taking much risks.

    Here’s what I suggest. Don’t be taken aback by this. Its your money and it can be made to work much faster & better.

    1. Surrender your current LIC policy and ask your LIC Agent to convert to a Term Plan. For about 20K annual premium, you should be able to get an insurance cover of Rs.30 lakhs approx, at your age. If yr LIC policy has already done 3 yrs, then you are eligible to surrender. To educate yourself, why a term plan is much much better and why Insurance & investment should not be mixed, consider the following articles
    http://www.personalfn.com/detail.asp?date=6/1/2005&story=1
    http://www.valueresearchonline.com/story/h2_storyView.asp?str=7430
    2. After deducting this 20K, you are left with Rs. 1 lakh annually that you can gainfully invest in a mix of PPF & conservative 5Star rated mutual funds. I suggest a mix of 60:40 i.e. 60,000 in PPF (complete safety) and 40,000 in a 5star MF ( reasonable safety,over the long term of 10-15 years)
    3. PPF gives you a compounded rate of 8%. And most top-rated diversified mutual funds have given 20% plus, if one stayed invested over the long term. You could consider SBI Contra, HDFC Prudence, HDFC Taxsaver, Reliance Growth. These are funds with fantastic track records (low to average risk with high to above average returns). Check out latest ratings at http://www.valueresearchonline.com/toprated.asp

    4. Finally, this split investments must deliver you 50+ lakhs in 15 years, with investments in completely safe and coservative instruments such as PPF and a 5Star MF. The table below shows you how. If you read the figures sequentially, you will figure it out what I have tried to show that, in 15 years, you should be able to get total accruals of over 50 lakhs:-), if you invest a lakh every year in the above manner. (Try as I did, I couldnt give you a excel table, as Yahoo Answers doesn’t support Rich Text, just yet).

    Compounding Rate (PPF)1.08Conservative MF returns1.2
    yrYearly AAccruals (A)Yearly BAccruals (B)Total Accrual (A+B)
    1 60,000 64,800 40,000 48,000 112,800
    2 124,800 134,784 88,000 105,600 240,384
    3 194,784 210,367 145,600 174,720 385,087
    4 270,367 291,996 214,720 257,664 549,660
    5 351,996 380,156 297,664 357,197 737,353
    6 440,156 475,368 397,197 476,636 952,004
    7 535,368 578,198 516,636 619,963 1,198,161
    8 638,198 689,253 659,963 791,956 1,481,210
    9 749,253 809,194 831,956 998,347 1,807,541
    10 869,194 938,729 1,038,347 1,246,017 2,184,746
    11 998,729 1,078,628 1,286,017 1,543,220 2,621,848
    12 1,138,628 1,229,718 1,583,220 1,899,864 3,129,582
    13 1,289,718 1,392,895 1,939,864 2,327,837 3,720,732
    14 1,452,895 1,569,127 2,367,837 2,841,404 4,410,531
    15 1,629,127 1,759,457 2,881,404 3,457,685 5,217,142



  3. Currently you are on wrong track by giving so much LIC Premium.

    Now come to right track & invest in good mutual fund monthly

    HDFC Prudence, SBI Balanced, HDFC Equity, Reliance growth will be good funds for you.


  4. Hi, you can go for systematic investment plan in mutual funds. If you invest 10,000 per month you might achieve your target.





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