Rs 1 crore in 5 years: Check this guide for 40-year-olds earning Rs 2.5 lakh/month

India Today

02-06-2025

Turning 40 often brings a fresh focus on future goals, especially when it comes to your children's education. For many parents, the big question is: Can I save Rs 1 crore in the next five years for my daughter's studies? If you're earning Rs 2.5 lakh a month, the goal may sound ambitious, but it's certainly achievable with the right planning, discipline, and smart investments. However, one needs to follow a well-planned, disciplined, approach and choose the right investments.advertisementWHY GROWTH SHOULD BE THE PRIORITYWith only five years to reach the Rs 1 crore mark, you'll need to focus on high-growth investments rather than playing it safe.Avinash Polepally, Business Head at ClearTax, says, 'If a 40-year-old investor aims to build a Rs 1 crore corpus in just five years, they'll need to aggressively invest in high-growth assets. Investing Rs 1 lakh per month into a mix of equity mutual funds, especially flexi-cap, mid-cap, and thematic funds, can help target returns of around 16–18% per year, assuming consistent investing is maintained.'SAFER OPTIONS MAY NOT BE ENOUGH
You might feel tempted to go for stable options like PPF, hybrid funds or endowment plans. But for a short-term goal like this, they may fall short.'Given the short investment horizon, safer options like PPF, endowment plans, or hybrid funds might not offer attractive returns and could lead to missed growth opportunities,' Polepally adds.Instead, a better approach is to aim for higher returns while managing risk efficiently. It's also important to monitor risk indicators such as standard deviation, Sharpe ratio and downside capture to make informed decisions, he mentioned.WHERE SHOULD YOU INVEST? A SAMPLE MONTHLY PLANadvertisementAvinash Polepally shared a simple example of how to divide your Rs 1 lakh monthly SIP smartly.
Photo Credit: Avinash Polepally, Business Head, ClearTax
Avinash Polepally recommends allocating Rs 35,000 to flexi-cap funds for broad equity exposure with an expected 18% return, likely yielding Rs 34,37,295. Rs 25,000 (25%) should go into mid-cap funds targeting a 20% CAGR, potentially growing to Rs 26,18,125. Next, Rs 10,000 (10%) in small-cap funds can target 27% returns, offering a projected value of Rs 12,72,735 in the next five years, while the same amount can be invested in thematic funds, with a CAGR of 26%, resulting in Rs 12,35,935 after five years.Further, he said that for stability, Rs 10,000 (10%) in arbitrage or balanced advantage funds (7% CAGR) can grow to Rs 7,19,030 towards the end of five years. Finally, Rs 5,000 (5%) each in corporate bonds and gold ETFs add a safety cushion, both expected to deliver Rs 3,50,745 at the end of five years.In other words, with a solid monthly income, saving Rs 1 crore in 5 years is absolutely doable. But it requires commitment, wise investment choices, and avoiding distractions. Start now, stay consistent, and your daughter's education fund will be ready right on time.