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Most of the investors in India set a target of Rs 1 crore, but do not know what the right portfolio should be. It is still a challenge for many people to understand how much stake should be kept in equity, debt and gold. Experts have now suggested a balanced and effective formula to reach this goal, which gives both returns and security.
New Delhi. For most investors, accumulating Rs 1 crore in 10 years is a big and complicated dream-like goal. People keep investing money in SIP, FD, PF or gold, but they do not understand the direction of this money and which investment will take them to this goal. Clearing this confusion, financial experts have told how a balanced and sensible portfolio can take you to the target of Rs 1 crore.
75-10-15 Portfolio: Equity will be the engine, debt will become the cushion, gold will provide security.
According to experts, to achieve the target of Rs 1 crore, the most important thing is correct asset allocation. It is advised to invest ₹75 of every ₹100 invested in equity mutual funds, which have a small and mid-cap orientation that can provide rapid growth. Sector diversification reduces risk and gives better compounding in the long run. After this, it is advisable to keep ₹10 in debt funds, which provide security and stability to the investor during emergencies and market crashes. Whereas investing in gold balances the portfolio, because the movement of gold remains separate from equity and it also provides protection from inflation.
Tax planning will increase net returns, wrong choice will cause loss
A large part of the high returns over the long term come from the right tax structure. In equity funds, LTCG tax of 14.95% after one year gives a lot of savings to investors, whereas if sold within a year, the tax can be up to 23.92%. Debt funds are always taxed as per your tax slab, so experts recommend hybrid funds that offer the stability of debt and tax benefits of equity. The same LTCG of 14.95% is applicable on gold after 12 months, which makes it more attractive.
Will this strategy yield 12% returns? Experts’ answer-yes
Experts believe that the 75-10-15 model is capable of delivering around 12% gross returns in the long run, provided investors maintain discipline and do not panic and break investments midway. The fast growth of India’s economy, improvement in corporate earnings and stability of gold make this mixed portfolio strong. This portfolio takes the investor towards the goal of ₹ 1 crore by balancing risk and return over a period of ten years.
