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Time of India
02-08-2025
- Business
- Time of India
Kab Banoge Crorepati? In how many years can you get Rs 1 crore with Rs 25,000 monthly investment
Rs 1 crore is a nice big round figure that everybody likes and many aspire for. It is a magic number for many Indian savers: a milestone of financial security and a goal that feels both ambitious and achievable. Tired of too many ads? go ad free now The question is: how many years will it take you to reach there if you can invest Rs 25,000 a month? The answer depends entirely on where you put your money. Regardless of the path, the real driver is consistency. An investment of Rs 25,000 a month, invested with discipline, can make you a crorepati. It's just a matter of when, and how much risk you're willing to ride. Let us look at how much time some commonly used investment options will take to build a corpus of Rs 1 crore. How soon can you build Rs 1 crore corpus with monthly investment of Rs 25,000? Investment option Returns (CAGR) Time taken to reach Rs 1 crore Bank deposits 4.88* 20 years 4 months PPF 7.1 17 years Provident Fund 8.25 15 years 11 months NPS 9 15 years 4 months Hybrid funds 10 14 years 8 months Ulips 12 13 years 5 months Equity funds 15 12 years Direct stocks/ PMS 18 10 years 11 months *Post tax returns in 30% tax bracket Bank deposits: 20 years and four months Post-tax return: 4.88% The safest option is also the slowest, taking over 20 years to reach the target. While your capital is safe and the returns are assured, the interest is fully taxable, which eats into the returns. Banks are offering around 6.8-7% on 5-year fixed deposits and recurring deposits. But in the 30% tax bracket, the post-tax return will be only 4.88%. There's also the problem of reinvestment risk. Bank deposits are rarely beyond a tenure of 5 years, so the investor will have to reinvest the proceeds once the deposits mature. If the rate has declined by then, the Rs 1 crore goal will get even longer. Bank deposits work best for ultra conservative savers who can't stomach volatility and don't mind waiting. PPF: 17 years Current interest rate: 7.1% This is a better and more efficient option since the interest earned is tax free. With government backing and tax benefits (EEE status), the PPF offers steady growth. Tired of too many ads? go ad free now However, PPF has an annual investment limit of Rs 1.5 lakh per individual, so it is not possible to invest Rs 25,000 a month in this option unless two individuals (maybe husband and wife) do this together. If each of them invests Rs 12,500 per month in the PPF, they can reach the Rs 1 crore mark in 17 years. Provident Fund : 15 years and 11 months Rate of return: 8.25% This trusted retiral benefit scheme for salaried individuals offers assured returns and tax advantages. Contributions are linked to the salary of the individual, but can be hiked to some extent using the Voluntary Provident Fund. Contributions are deducted directly from salary, ensuring disciplined and regular savings without active effort. NPS: 15 years and 4 months Returns assumed: 9% Unlike the fixed income and assured returns options discussed above, this scheme is a market linked option. The returns are not assured, and will depend on how the market performs. But if the investor has a long-term horizon, and a healthy mix of debt and equity exposure, blended returns of 9% are achievable. The glitch is that the money is locked in till you turn 58. Even at 58, 40% of the corpus must compulsorily be put in an annuity that will give a monthly pension for life. This reduces the liquidity for the investor. Hybrid funds: 14 years and 8 months Returns assumed: 10% For investors who want to avoid the restrictive rules of the NPS, hybrid funds are a good alternative. These funds invest in a mix of equity and debt. Some even invest in commodities such as gold and silver. These multi-asset funds can be a stable way to reach the Rs 1 crore target. But keep in mind that gains are taxable so the Rs 1 crore corpus might be pruned by tax. Ulips: 13 years and 5 months Returns assumed: 12% These insurance-cum-investment products can help you build a Rs 1 crore corpus. But the maturity amount will no longer be tax free if the annual premium exceeds Rs 2.5 lakh. In your case, it will be Rs 3 lakh. The upside is the Rs 30 lakh life cover that comes with the plan. Also, while newer ULIPs have become cheaper and more transparent, they still carry high exit charges and offer limited flexibility. Returns will vary based on fund choice and market cycles. Equity funds: 12 years Returns assumed: 15% Equity mutual funds are perhaps the most efficient way to build your corpus. A well-managed SIP in a diversified equity fund can hit Rs 1 crore in just 12 years. The downside? Short-term volatility and the need for discipline through market ups and downs. The maturity amount will be taxable because of the change in rules for capital gains in recent years. But adept tax planning and regular harvesting of gains every year can reduce the tax liability to a great extent. Direct stocks and PMS: 10 years 11 months Returns assumed: 18% Want to make your money grow faster? You can opt for direct investments in stocks or sign up for a Portfolio Management Service (PMS). It is the fastest route which can build a Rs 1 crore corpus in less than 11 years. But that speed comes with high risk. Stock markets can be brutal, and very few investors consistently beat mutual funds over long periods. PMS services also come with high fees and minimum investment thresholds.
Mint
10-06-2025
- Business
- Mint
Don't miss your opportunity to lock-in high fixed deposit rates
MUMBAI : If you are planning to deposit your money into a bank fixed deposit (FD) don't delay any further. With the Reserve Bank of India (RBI) cutting the repo rate, banks are likely to cut fixed deposit (FD) rates further to protect their margins. But still there is a small window of opportunity to lock in prevailing FD interest rates, before they are re-adjusted. On 6 June, the RBI in a surprise move cut the repo rate by 50 basis points (bps) after a 25bps cut in previous monetary policy. The central bank also cut cash reserve ratio (CRR) by 100bps. A basis point is one-hundredth of a percentage point. Also Read: Voluntary Provident Fund offers high interest rates. But withdrawals are a pain. CRR is the percentage of a bank's deposits that it must keep with the central bank in the form of cash. Repo rate is the interest rate at which commercial banks borrow money from the central bank. Window of opportunity 'There is a brief opportunity window for investors to lock in the higher FD rates at this point, before they potentially see a downfall. In the current economic situation, locking in current rates can turn out to be a strategic move. Any future change in repo rates by the RBI will depend on several factors, like inflation trends, economic growth, and financial global conditions, which may take some time to stabilize," said Raj Khosla, founder and managing director of 'Banks have already been reducing rates for past few months following the RBI's last rate cut, but investors can take advantage of prevailing rates, before they drop any further," said Joydeep Sen, a corporate trainer (financial markets) and author. Also Read: With interest rates expected to ease, these tax-efficient funds may be just right for you Some banks have already reduced interest rates on savings accounts to reduce the stress on margins. Also, banks have redued FD rates in the range of 30-70bps since February 2025, according to a research report, Ecowrap by State Bank of India (SBI). "Transmission to deposits rates is expected to be strong in the coming quarters with further rate cut in deposits expected from banks," it added. 'For depositors, a 50 bps repo rate cut may not slash FD rates overnight, but it does signal the beginning of a downward trend. Banks are likely to start trimming deposit rates, especially for short- and medium-term tenures. If you've been waiting to lock in current rates, some of which still hover around 7.5%, now may be the time. Senior citizens, who enjoy an extra 25-50bps, should consider locking in longer tenures," said Adhil Shetty, chief executive of Also Read: Monetary policy: We live in interesting times for interest rates
