I want to become rich quick but with no risk !



Dear Fpguru,



I visit your site & find it very helpful for all who invest.  I have a question. I want to invest Rs 1 lakh per year and my dream is to become a Crorepati in just 10 years. What should I do? I have searched other sites as well but to no avail. There was one solution is that calculated the investment returns at 7-8%. Please suggest how and where to invest. I would like to go for non market linked schemes & prefer guaranteed funds.





Dear Mr. Nagesh

We thank you for visiting our website & asking us a question. You have asked us a question which everyone is asking- how to become rich?!

You have mentioned that you plan to invest to Rs 1 lac per year for the next 10 years & desire to have a corpus of Rs 1 crore at the end of that period.  This means that for a total investment of Rs 10 lacs you want to make a profit of Rs 90 lacs. That is absolute returns of 900% & annualised returns of 47.39% p.a. over the next 10 years. If any investment could consistently give 47.39% every year for a 10 year period, life would be great! But in reality no such investment is there. There are some get rich schemes available which are just ponzi schemes & scams. These have immense risk attached to them.

The other point mentioned by you is that you would not like to take any risk. Well you can’t have your cake & eat it too! Your investment dream requires extremely high returns which will come with high risks but you want to invest in guaranteed funds. Such funds will give return in the range of 6%-10% & not more. If 10% is the rate of interest available you will have a corpus of Rs 16 lacs approx at the end of 10 years.

Investment is not only about numbers but also about the human element. Rational approach is required. Understanding your risk capacity, rational return expectations, time horizon, asset allocation, patience, discipline, etc are the benchmarks of successful investment. I may want to become to the most powerful man on earth currently i.e. the President of USA but it is just a dream which is not possible for me keeping in mind my current circumstances. Goals must be realistic!

We would suggest you to first understand that risk & return are like Siamese twins. They go everywhere together. Higher the risk, higher the return & vice-versa.

Your habit of saving is a good habit which will definitely make you a crorepati, not in 10 years but surely in 20-25 years. You are investing for the long term so if you invest in Equity, you can earn a good rate of return. If we assume you get returns of 15% p.a. you will have a corpus of Rs 20 lacs in 10 years. At the end of 20 years the corpus would be Rs 1 crore. This is because not only will your annually investments of Rs 1 lac grow but the amount already invested too will grow. This is the power of compounding! This however takes to time to show its effect.  Even if we assume an annual return of 12% p.a. you will achieve the crore mark in 23 years.

So Nagesh you can surely become a crorepati with your investments but do keep a rational approach to it. If you stick to the right way of investing, you will achieve your goals!

Hope this solves your query!



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