I want to save Rs 1 crore in 10 years. Is investing Rs 50,000 a month enough?

Monthly SIPs of Rs 50,000 in passive or bluechip funds, with 10-12% CAGR, would comfortably allow you to accumulate Rs 1 crore over the next decade. If you invest in good ELSS funds, you can expect much higher returns, and your at the end of 10 years could grow to Rs 2 crore. This would be even higher if you step up your investments annually.

Keep three things in mind when you invest. Diversify your investments, but not too much. Over-diversification within mutual funds can lead to varying returns from different fund classes, bringing down the overall return.

Second, plan your financial goals, including retirement, and save individually for each goal. Finally, ensure you are adequately insured. As per the information shared by you, you have a monthly investible surplus of about Rs 36,000.

It is advisable to first secure your financial health by having an adequate emergency fund and insurance. While you have already purchased term insurance from HDFC Life, ensure that it is at least 10-15 times your annual income. Buy a health cover of Rs 50 lakh, with a base cover of Rs 5 lakh and super top-up cover of Rs 45 lakh, to avail of a bigger cover at a low premium.

You can go ahead with the monthly investment of Rs 12,500 in the Sukanya Samriddhi Yojana. Investments in this scheme qualify for tax deduction under Section 80C, while the interest income is tax-free. As it offers higher returns than the PPF while scoring the same on taxation, capital and income protection, you can trim down your annual investment in the PPF to `500.

Contain your gold investment to 10% of your monthly investible surplus. The negative correlation between gold and equities makes the former more of a hedging instrument against equities than a growth-oriented asset class. Invest in gold through Sovereign Gold Bonds (SGB) in the secondary markets at monthly intervals.

In addition to the scope of capital appreciation, SGBs offer an interest income of 2. 5% per annum on the nominal value of investment, a feature not offered by physical gold, gold ETFs or gold funds. The rest of your monthly surplus can be distributed equally among large-cap, flexi-cap and aggressive hybrid fund categories through SIPs.

You can consider the direct plans of ICICI Prudential S&P BSE Sensex Index Fund and HDFC Index Fund S&P BSE Sensex Plan for the large-cap index category; PGIM India Flexi Cap Fund and Parag Parikh Flexi Cap Fund for the flexi-cap category; and Kotak Equity Hybrid Fund and ICICI Prudential Equity and Debt Fund for the aggressive hybrid category. You can stop fresh investments in the Kotak ELSS Tax Saver as your Section 80C deduction would be covered by your Sukanya investment and equity exposure by investing in the above-mentioned equity funds. He is young and has a long life ahead of him, assuming a life span of 80 years.

Life is unpredictable and things can take a turn for the worse anytime. His current expenditure of Rs 15 lakh per annum is high and, after factoring in inflation, his annual expenses may increase further. Currently, Rs 6 crore may be sufficient to meet his expenditure for several years via the SWP (systematic withdrawal plan) route.

However, considering the volatility in equity markets, interest rates and inflation, it would be risky to not do anything and depend on this corpus to sustain him for the next 50 years. Even though his aim is very noble, to be on the safe side, he should consider taking up a job or start a business to secure his future. He may want to take up a job in education through which he can get an income and, at the same time, help poor children.

He may want to work for a decade or two and then think of taking up retirement. Till this time, he can invest Rs 4-5 crore of this corpus in equity mutual funds, and let it compound and grow. He can put in the rest in high credit quality fixed income instruments for stability, regular income and emergency needs.

In this way, he will be fully secured, with minimal risk to his finances. The PPF is a great product for investments up to Rs 1. 5 lakh per financial year to get tax benefits and stable capital appreciation.

It can act as a cushion against volatility incurred by equity investments. Currently, the debt AAA bond yields are 7-8% and the average rental yields are 2-5%. The investments in real estate also have additional risks: these can be highly illiquid, there may be loss of rental income due to extended periods of vacancy, non-payment of rent, damage to property, and unexpected maintenance costs.

It is not advisable to invest in real estate for rental income. Instead, consider investing in high credit quality fixed income products like corporate bond mutual funds. With a time horizon of 14 years till retirement, it is important to factor in inflation in the retirement corpus calculations.

The retirement amount should include both current and future needs and wants, lifestyle income and expenses, medical history and costs, etc. Considering the increase in average life expectancy, you should not retire early and continue to have a regular income stream for as long as you can. You should try to invest at least 20-30% of your in-hand salary in equity mutual funds for the long term.

Assuming 12% CAGR returns in equities for 14 years till you are 50, if you invest Rs 25,000 per month via SIPs in equity mutual funds, you shall be able to generate around Rs 1. 09 crore. Try to save and invest as much as you can since you have plenty of time and this will help in the compounding process.

Given your long investing horizon, you can take risks. Hence, consider investing around 50-60% in flexi cap strategies, 20-25% in mid-cap funds and 20-25% in small-cap funds. (Disclaimer: The opinions expressed in this column are that of the writer.

The facts and opinions expressed here do not reflect the views of . ).