I am 25 years old and have just started earning. How to earn my first crore?

Question by: Nupur 

Reply by: Sushil Jain, CFP 

First of all, we appreciate that you are thinking about investment and creating wealth from the very beginning of your career. Before investing to build a corpus of the first crore, you must take care of the foundation of every investment plan:  

1) Adequate health coverage (for dealing with unexpected medical expenses) 

2) Adequate life cover (for protecting your family) 

3) Keeping 6-month household expenses as an emergency fund 

4) Risk profiling and asset allocation 

Once you cover above mentioned pints, you must focus on investing to create your first crore by following the below strategy. 

• At least 25 per cent of your income should go for investment and wealth creation 
• Around 50 per cent should go for household exp and maintaining the standard of living 
• A maximum of 25 per cent may spend in lifestyle expenses if the budget permits. 

Investment strategy for one crore 

You can plan for one crore based on your investment capacity, if you wish to create 1 crore in 20 years you need to invest around Rs10,000 pm in diversified large and mid-cap funds. The rate of return is assumed at 12 per cent.  

If you invest Rs20,000 pm , it will take 15 years to create a corpus of Rs1 crore. 

But as you are at the starting point of your career, we will suggest you go for an incremental SIP as your income will grow fast in the first 15 to 20 years of your life. 

If you invest Rs10,000 pm with a 10 per cent increase in sip every year, it will take 16 years to create one crore. If you invest Rs20,000 pm with a 10 per cent increase every year, it will take only 12 years to generate one crore corpus. 

We advise you to first create your financial plan based on your financial goals, risk profile and time horizon then start investing and create wealth. 

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