Kaun Banega Crorepati 12 (File photo I Screen grab)  |  Photo Credit: YouTube
First things first, maximum prize money in the popular Indian game show ‘Kaun Banega Crorepati’ (KBC) styled on the hit British programme ‘Who Wants to Be a Millionaire’ is Rs 7 crore and not Rs 1 crore as suggested in the header: hello clickbait!
Secondly, this article isn’t even about the Amitabh Bachchan-hosted series currently in its 12th season. Instead, it’s about how disciplined investing can help anyone accumulate the aspirational sum of Rs 1 crore by consistently putting away some money for future goals.
While the figure of Rs 1 crore might seem big for newbie retail investors, it can be achieved based on certain factors such as investment duration, monthly investment amount, and the return on investment which ultimately dictate how big or small an investor’s nest egg is likely to be in future.
Here is a ready reckoner to understand how much monthly investment would it require over 5 years, 10 years, 15 years or 20 years for you to become a crorepati.
ELSS vs PPF vs FD
Comparing the return on investment (ROI) of different financial instruments is the thumb rule of investing. This ROI or profitability differs with the three most popular investment options in India: ELSS (equity-linked savings scheme), fixed deposit (FD), and Public Provident Fund (PPF). Out of the three, investments made in ELSS offer the best ROI.
In lay terms, ELSS investments turn out to be more profitable than the other two sans risk involved. With FDs, the returns range from 6% to 8% per year, depending on the bank chosen. Company FDs earn a higher ROI with 10% to 13% per year. PPF ROI is fixed by the government currently at 7.9% per year. Historically, equities have delivered over 12-14% annualised returns. So, it is clear that equities are your best bet to become a crorepati in the shortest time possible. It is to be noted, however, that equities are not for the frail-hearted or risk-averse. In case you’re a pensioner, FD is best friend owing to almost no risk associated with it.
Nothing but the best
But once an investor is clear that they can stomach the volatility in a trade-off for better returns, the logical next step is to narrow down the best possible way to invest. However, finding the time and discipline to do independent stock picking is a tricky business for the lay retail investor. It’s best that stock picking is left to professionals and therefore ELSS mutual funds come into play.
ELSS mutual funds are professionally managed investment schemes that collect money from investors and invest in a pool of stocks to get the best possible returns. This category has its own set of critics owing to high fees charged by the fund managers which eventually comes out of the pocket of the investors of these schemes. However, there’s a simpler category of ELSS mutual funds called Exchange Traded Funds (ETFs) which undercut the overhead of fat cat managers, thereby putting more money in the hands of investors.
ETFs merely emulate a particular index and therefore require less human intervention, saving costs of expensive fund management. Money manages across the spectrum agree that blue-chip ETFs which emulate the benchmark indices such as Nifty 50 and Sensex 30 are the best way to ride the glorious wave of stock market rise. In most cases, the annualised stock market returns, advertised and publicised, refer to these benchmarks which are made up of best companies or blue-chip in the country.
(**This article is intended as a general guide for investing. It is advised that investors consult professional financial advisors and take a second opinion to meet specific money goals and future planning)