Before you think this article is an exaggeration, we need to state that, it is indeed possible to accumulate Rs. 1 Crore by saving just Rs. 90 every day. The only catch is that it won’t happen overnight. So in case you’re searching for some otherworldly “easy money scheme” that will bring you everlasting wealth, you’ll need to look somewhere else. But if you’re looking for a steady method of building wealth, then we believe that there’s no better way than utilizing the magic of compounding.
Compounding refers to reinvestment of earnings to continuously grow the principal amount, year after year at a specific rate of return. The power of compounding makes your money work harder for you and is maybe the most useful asset that an average investor can use to plan for his many life goals, including retirement.
How Can You Accumulate Rs. 1 Crore?
Ideally, to accomplish this, you must start investing in your 20s in order to reap the full benefits of compounding. However, if you don’t get started until your 30s, accumulating Rs. 1 Crore is still more than possible, considering that you save a little more than Rs. 90 a day.
Anyone with their eye on saving Rs. 90 a day can save approximately Rs. 2,700 a month or Rs. 32,400 a year. So how much can you accumulate if you continue to save Rs. 90 a day until you turn 60? Assuming you start working at 24 and retire at 60 (duration is 36 years), saving Rs. 90 a day will give you:
Rs. 32,400 x 36 = Rs. 11,66,400
That’s not much at all. Meaning, saving alone is not going to help you accumulate the desired corpus. You need to invest in the best insurance policy for investment and grow your money as well.
Now, assume that you saved Rs. 90 a day or Rs. 2,700 a month and invested that amount in a prudent financial instrument that offers 10% rate of return. Considering that the interest rate doesn’t move, and you invest for 36 years (till you turn 60), you will accumulate:
| Age | Amount Saved Per Day | Amount Invested Per Month | Rate Of Return | Accumulated Corpus
At The Age Of 60 (Approx) |
| 24 | Rs. 90 | Rs. 2,700 | 10% | Rs. 1.14 Crores |
As you can see, the total corpus now comes to Rs. 1.03 Crores. However, if you start investing at the age of 35:
| Age | Amount Saved Per Day | Amount Invested Per Month | Rate Of Return | Accumulated Corpus
At The Age Of 60 (Approx) |
| 35 | Rs. 90 | Rs. 2,700 | 10% | Rs. 36.12 Lakhs |
It’s needless to say that, if you start your investing journey late, you will require saving and investing a higher amount to reach the “1 Crore” target. Simply put, if you start investing at the age of 35, you will have to save approximately Rs. 250 each day instead of Rs. 90. Take a look:
| Age | Amount Saved Per Day | Amount Invested Per Month | Rate Of Return | Accumulated Corpus
At The Age Of 60 (Approx) |
| 35 | Rs. 250 | Rs. 7,500 | 10% | Rs. 1 Crore |
The Path to Rs. 1 Crore
While the numbers in the above tables can get you excited, it needs the commitment of investing in some of the best long-term investment plans which can make a huge difference in the long run. One such investment is a Ulip-linked Insurance Plan or ULIP.
Many investors consider ULIP to be the best long-term investment plan primarily because it offers multiple fund options, including debt, balanced, and equity funds. Therefore, individuals having a longer investment horizon can consider investing in equity-based funds to accumulate the desired corpus by their retirement age. Historically, equities have shown higher CAGR of more than 13% in the last decade, therefore investing in equity-based ULIPs makes sense.
The best part is that ULIPs offer life cover and thereby, secure the financial future of your loved ones in case of your untimely demise. Thus, you not only get the opportunity to generate market-linked returns but also get coverage against untoward eventualities.
To cater to your wealth creation needs, reputable insurers like Max Life Insurance offer ULIP plans with benefits such as:
- Lower charges on investments – no policy admin and premium allocation charges
- Freedom to choose sum assured multiples, policy term, and premium payment term
- Coverage up to 85 years
- Multiple fund options – low, medium and high-risk investment options
- Flexibility to switch funds
- Availability of partial withdrawals
- Availability of top-up facility
- Tax benefits u/s 80C
Apart from the 80C tax benefits (on premiums paid), the maturity benefits in ULIPs are completely tax-free under Section 10 (10D).
All in all, investing in tax-advantaged ULIPs can help you grow your wealth and accumulate Rs. 1 Crore more quickly as you won’t have the drag of taxes pulling down your finances.