A reader who sent us the following details wants to know if investing Rs. 75K a month (increasing 10% a year) will fetch him Rs. 10 Crores after 15-20 years with a 12% return expectation. He also wants to know how to allocate this money.
- Age:32
- Profession: Consultant
- Emergency fund – building
- Term insurance – yes
- Health insurance – yes
- Equity Rs. 12 Lakhs
1. Should I invest all 75k in equity?
2. Or should I patiently invest 75k in bonds for the next five years and build a corpus of (60*75=45lakhs) in bonds,
From then on, I would get 45k as interest payout, combine it with 75k, and invest in equity.
3. Or should I allocate 50-50 in debt & equity?
Let us treat it as a general goal (and not retirement, where the math will be different). We shall assume the current fixed income is zero, as that is not mentioned.
A balanced mixture of equity and debt is the right approach. However, as shown below, you also need a de-risking plan.
The freefincal robo advisor tool suggests the following asset allocation schedule for 12% equity and 6% fixed income return expectations after tax.
🔥Secure your future with our Robo-advisory tool trusted by over 3,500 investors and advisors. From effortless retirement planning to funding your children’s biggest dreams, turn your financial goals into reality. 🔥
Subscribe for money management solutions via email! (Link takes you to our email sign-up form) Join 32,000+ readers in our community.
👉 New Tool Alert! NaviPlan: A Privacy-Focused Multi-asset Tracker and Goal Planner 👈
| Year of investment | Suggested Equity allocation | Suggested Fixed Income Allocation |
| 1 | 60% | 40% |
| 2 | 60% | 40% |
| 3 | 60% | 40% |
| 4 | 60% | 40% |
| 5 | 60% | 40% |
| 6 | 60% | 40% |
| 7 | 60% | 40% |
| 8 | 60% | 40% |
| 9 | 55% | 45% |
| 10 | 50% | 50% |
| 11 | 45% | 55% |
| 12 | 40% | 60% |
| 13 | 35% | 65% |
| 14 | 30% | 70% |
| 15 | 25% | 75% |
| 16 | 20% | 80% |
| 17 | 15% | 85% |
| 18 | 10% | 90% |
| 19 | 5% | 95% |
| 20 | 0% | 100% |
Try to increase your income so that your investment can also increase. This will increase the probability of getting close to the 10 Crore mark. If everything goes to plan, there is a good chance of achieving this in 20 years. Also, start with an investment amount a bit more than Rs. 75 a month (increasing 10% a year – bear in mind this will get progressively harder).