Creating Wealth for Long Term through Equity

POSTED BY Jagoinvestor ON August 28, 2008 COMMENTS (159)

We are going to discuss today, a huge wealth creation by investing with discipline over long period of time. We often think that investing a small sum of money will not be able to generate huge Wealth and we need to invest huge amount of money.

wealth creation

Creating Wealth

Its obviously true that more money will create more wealth, but we are going to see today that we underestimate small savings and how small investments over a long period of time can generate fortunes.

How much wealth you can create, if you earn around $1000 /month (Rs.40,000 per month) and can invest 10% of that amount every month for next 30-35 yrs. I am assuming you are a 25 yrs old and retiring at the age of 60 (though i want to retire at 40). Total dependents are 3-4.

And monthly expenditure is Rs.25,000 ($600/month).

What kind of wealth can this person create?

Can he invest Rs 5000 ($125) in a diversified Equity Mutual fund per month till his retirement. I hope the answer can be YES

As we said that he is investing in Equities, What kind of return should we expect? 5% , 20% or 50%, but Wait … Equities are risky, it can be negative also !!! that’s very true … but People may not know that Equities are extremely risky in short term, but its almost not at all risky in long term, and if the long term = 35 yrs, then forget it, you can get some great returns.

Risk in Equities are inversely proportional to the investment tenure. Well that’s a different topic to talk about (And i will post an article on that soon , keeping an eye !!!) Just for the data, Indian Stock markets have given return of 17%+ CAGR return in 28 years, from 1979 (inception) to 2007. We are talking about Sensex.

So, to be safe we can easily consider 15% CAGR return in Long term (remember LONG TERM).

Coming to the point, It may happen that during initial years, our investor may face difficulty investing this much money considering, he may have other important things to take of and later he may have more responsibilities. But during is career life, his salary will also rise and then 5000 will be a small percentage of his salary.

So assuming he can do the investment we are proposing, what kind of retirement corpus he can build? Guesses?

I am sure most of the people will be thinking the following way:

He invested 5000 * 12 in a year, which is 60,000, and then he does it for 35 yrs , so he invests total of 60,000 * 35 = Rs 21,00,00 0 (21 lacs). And he will get some return of 15% every year. if we take 15% of this 21 lacs, it will be around 3,00,00, so total corpus = 24,000 and also as this is compounded , his interest will also keep growing at 15%, so it will be more than 24,00,000 , so lets take it 50,00,000. Fine …

Ok , let take 70,00,000 (70 lacs) to be safe. This is a calculation done not exactly by the proper annuity formula, but a workaround, which a general person can think of.

How much does he generate with this strategy

You can also look at my another article on Early investing and power of Compounding to get an idea about early investing and how compounding is a great tool. But keep going ahead if you are enjoying this article.

How to create wealth

So the question is What will be his corpus , can it be anywhere near to 70,00,000 . The answer is that his actual Wealth will be way beyond this amount. After doing the actual calculation i can see that it will come around 7.43 Crores (Rs 74 million) .

But how is it possible , such a big amount !!! .

That’s because of compounding power . The interest earns interest and that again earns interest and this keeps on going. Initially the interest earned is very small , but as the time passes , the amount keeps growing and the interest also grows at an unbelievable amount.

Can you believe that this investor will earn more than 1.04 Crores only in interest in his 35th year (last year) , more than 4 times the money he actually invested whole his life. That’s all possible because of systematic and consistent investing with out fail and because of Power of compounding.

That’s the reason why one of the greatest Scientist Albert Einstein said “Compound interest is the 8th wonder of the World”.

So it that all we are going to talk about today , NO !!! We have more to talk on this topic.

Why does this investor takes pain of investing that 5,000/month all this life. What if he invests just 10 yrs and leaves that money to grow for another 25 yrs. What if this is his plan till retirement.

The sudden thing which will come to your mind is that he invests for 35 yrs and created wealth of 7.43 crores , What if he just invests for 10 yrs .. it should be 10/35 * 7.43 crores = 2.12 Crores . Is that true ?

Will it actually be 2.12 Crores only. The answer is NO !!! . Then the question is how significantly different will his Wealth be in this case. The Answer is 5.88 Crores. Yes it will not be significantly less but just 21% less .

So Just by not investing for 71% tenure he actually gets 21% less money , that’s not a bad deal !!!

But wait , What if he wants that same 7.43 crores at the end , and still wants to invest for 10 yrs. the obvious way out is to invest more than his regular 5,000 per month . The question now is HOW MUCH MORE !!!

The answer is Rs 1420 more . Instead of 5,000 , he should invest Rs 6,420 per month for 10 yrs and then leave the money to grow for rest of 25 yrs. And he can generate wealth of Rs 7.43 Crores.

Watch this video to know how one can use Equity to create wealth over long term:

What we can learn from this

So there is a learning here and a very important thing to note , that more pain we take in the start , the better it is . In the initial years of career , its possible for people to invest more , as they have less responsibilities to handle and less dependents.

So it may be feasible for them to invest heavily in the initial phase of there career, which will benefit them for long term . Now see this person . Instead of investing 5,000 for whole of 35 yrs , If he chooses to take a little more pain in the initial 10 yrs and manages to invest Rs 1,420 more per month, then he can save investing for 25 yrs of his life and still can generate same Money.

One great question now !!!

What if our investor is ready to invest his 50% salary (20,000) per month for starting 2 yrs and then let it grow for rest 33 yrs. He is ready to heavily invest first 2 yrs of his career and do some sacrifices like not spending too much , no vacation , no fancy spending and all.

Can he still beat the target !!

Will he be able to generate the same Wealth for himself like in earlier examples !!

So here you go !!! , He will not only achieve the target , but exceed it.

His Wealth will be 9.24 Crores (Rs. 92.4 million) at the end of 35 yrs. I know that’s an Eye-opener . So now you know that the best time to invest was 5, 10 or 20 yrs ago , but if you missed it , don’t worry 🙂 . there is another golden chance and that’s NOW !!! .

please let me know what you feel about this article , that helps me to refine and write better articles.

Thanks, Happy Investing.

Note: The formula used for calculation is called Annuity. See formula under “Annuity Due” on this wiki page

159 replies on this article “Creating Wealth for Long Term through Equity”

  1. Murtaza says:

    Hi Manish. I am thankful to you providing such useful information and guidance particularly for salaried persons like me who are thinking of investing their money but know nothing of it. Your article is a great help. thanks a lot

    1. Thanks Murtaza

      Incase you are starting your investments , our team can help you setup things and do mutual funds ..

      Fill up this form if you want –

  2. Ganesha says:

    Hi Manish,
    Thank you very much Manish, its a very good article. But I have a query, its about compounding in MF NAV in Growth option.
    Suppose I’ve bought 1000 units each of 10RS. After 20yrs NAV might be 40rs, So my total NAV value becomes from 10000 to 40000, So I am not getting from where compounding works here. I’l get more amount only if NAV value increase by that time.. So Please explain me how this compounding works in Growth option.
    Thank you very much,

    1. Compounding in equities is not like in FD. When we say you will get compounded returns in mutual funds, we mean to say that when you will see returns in future, it will turn out to be 12-13% compounded, Its a way of saying the potential returns one will be getting in mutual funds.

  3. Buddhdev says:

    Hi Manish,

    After reading your different article about investment I would really like to say Thank you very much for sharing such useful information with investment enthusiastic. it really boost the confidence of an individual who wants to invest money for long or short time period once they have clear idea about what will be the return of their investments.

    1. Glad to know that Buddhdev ..

  4. Dinesh says:

    Hi Manish,

    I have read your article. It is too good and insightful and praise worthy. I am 35 yrs. old and I have started investing Rs. 20000/- per month in directly stocks viz., Havells India – Rs.7000/-, ITC – Rs.7000/- and HDFC – Rs.6000/-. I want to continue investing for the next 15 to 20 years. Kindly suggest me whether this strategy is good or any modifications required.

    1. Its good enough. Just keep tracking everything

  5. Babu says:

    My age is 24.I want to invest in reliance tax saver uti opportunities hdfc equity fund 3000/fund Fr 4 Years.Is dat gud performer or should i change?

  6. Manoj A says:

    Can anyone let me know what is the total value required for one to retire at the age of 40, considering life expectancy of 85 years.
    Average present monthly expense of one lakh.can Can you pls mail me in detail.

    1. You will need 4 crores today

  7. Kedar Sunku says:

    Hi Manish
    your article is simply superb , it helps for youth to explore different ways of getting income . I have a doubt that its mentioned 5000 per month through out 35 years we should invest and later in article 6420 per month for 10 years is sufficient again or 20000 per month for 2 years is sufficient and told to leave it . all the total sum of three methods is different . How could all three different final amounts lead to a same corpus of some crores .
    2)suppose i pay 5000 per month for 2 years , and later i think to pay 20,000 per month for some years. is there any fixed years to invest?? , is there any fixed target amount to reach ??

    1. Kedar

      Its different , because the tenure is different .. The amount is high , if in start you do not invest much , but its less if you do early investing ..

  8. Vishwajeet says:

    Dear Manish,

    I have gone through your blogs. And this is really fabulous and wonderful. It is really very helpful. Kudos for your suggestions. I have started investing Rs 15000 monthly in the below mutual funds through SIP from Jan 2015. Will you please comment on the below funds? Have I chosen right funds? Or, Do I need to re-consider on the below allocation. Thanks in advance!!

    ICICI Pru Focused Bluechip Equity Fund Reg Plan Growth – Large Cap — Rs 1000
    SBI Blue Chip Fund-Growth — Large Cap — Rs 1000
    Franklin India Opportunities Fund (G)—Large Cap— Rs 1000
    Reliance Tax Saver (ELSS) (G) —- ELSS —- Rs 2000
    UTI MidCap Fund—– Midcap—Rs 3000
    Franklin India High Growth Company (G) — Diversified Equity—-Rs 2000
    HDFC Balanced Fund (G) — Balance Fund — Rs 1000

    Best Regards

    1. These are all great funds. However I think you should have just chosen 2-3 funds .

  9. bhaskar says:

    Manish! excellent article . recently i invested 50k in SBI Blue Chip Fund – Direct Plan – Growth for long term like 20 years.

    1. Thats great ! .. congrats !

  10. pandherds says:

    Dear Manish,
    Your article is an ‘eye-opener’…how I wish we were wise a few years back.
    Nevertheless, I have started Rs.5000/- SIP in 5 Top Equity Mutual Funds for next 5 years.
    Will keep an eye on their performance every year, as suggested.
    Will see you again after 5 years of rich experience….keep up the Good Work!!!

    1. Great to hear that !

  11. SS says:

    I have just now means today only for the first time started reading the articles of Jago Investor Blog and I now discovered that how one can make most out of the money and not only money..many other aspects of life which are very important which one must know!! I thank you for posting such a great article..!!
    I am 43 years and working, can you suggest me some MF investments for my retirement plan i can invest upto 7000 monthly already have one sip ICICI pru for tax saving and LIC policy and PPF.

    Thanks & Regards.

    1. Hi Suman

      Thanks for sharing your views 🙂 . I must say that you are very new right now, so please go slow and spend some time first on these things . After 1 week, start taking actions 🙂

  12. Utsav says:

    Hello Manish, Wish u a Very Happy New Year 🙂

    I Have a SIP of Rs 1000 per month in HDFC top 200 since 9 Months. After reading your article.

    I am 28 & wish to invest 5k per month more towards generating the corpus of % Crore required for my retirement.please suggest me a brief plan and some good MF’s where i can invest for next 25 years which gives approx 15% return . I am not frequent watcher of fund performance & wish to continue with same funds for the whole accumulation period.

    Your Help is highly appreciated.


    1. Hi Utsav

      Please ask a close ended question point wise. Just asking suggest me a good plan will not work . I would suggest you to take help of our forum for this

  13. Chetan Ambi says:

    Excellent article on how to create long term wealth Manish !! Lucid explanation. Keep going.

    1. Thanks Chetan

      But are you applying these 🙂 ?

      1. Chetan Ambi says:

        Of course I am Manish. Else what’s the use of just reading the jagoinvestor articles and not applying. I am using MF’s and PPF for long term wealth creation from past 8 months. After getting salary hike this month I hv increase SIP amount also. Also I ll keep visiting MF performance for every 6 months or so. Thanks to jagoinvestor !!

        1. Good to hear that ! . you are a star commentator !

  14. Kuppusamy K says:

    Hi Manish, have a doubt, whether in super annuation , the interest on the contributions are distributed as pension or the contribution itself will get distributed as pension after retirement. Pl. clarify

    1. Even the interest should form the part of pension

  15. Poojan says:


    I am 27 years old and earn 70k per month. I can invest 15k per month. Last week my dad enrolled me for jeevan anand policy where i will invest 5k each month for the next 25 years and will get 40lacs at the end of that. I am not sure how to invest my remaining 10k and what returns can i expect. I want to invest in such a way that i get a lumpsum amount in 15 years from now. Some names i have heard are RD/PPF/ULIP/MF and the likes. Please advice where i can invest and what returns i can expect. Also, if you suggest lets say MF, then please also help me out with which MF you suggesting. Thanks in advance.

    1. First, I want you to relook into your LIC policy, where did you read that you will get 40 lacs after 25 yrs ? What is the surity on that ?

      1. Poojan says:

        It is jeevan anand policy. Monthly premium is Rs.5167. Guaranteed Bonus Rs.15 Lacs. Non-Guaranteed benefits: Bonus- Rs. 17Lacs + FAB Rs.675000.

  16. Dhiraj says:

    Hello Sir
    First of all thank you so much for such a wonderful site where a person can learn so much.I have been reading your articles from last 2 years and its been a wonderful experience with so much to learn.
    Coming to my query I am 23 years old recently started working with a mnc.I want to invest Rs 2000 in pure equity fund for long term 30+ years.I wanted to ask which fund to choose as their are many good Mf’s in the market.Please reply asap so that I can make a first step towards financial freedom 🙂
    Keep up the good work 🙂

    1. Dhiraj

      You can start with DSP BlackRock top 100 or HDFC Prudence !

  17. Deep Ajmera says:

    I have started reading the articles of Jago Investor Blog and I now discovered that how one can make most out of the money and not only money..many other aspects of life which are very important which one must know!! I thank you for posting such a great article..!!
    But I also have one query for the post..My question is..Wont the Inflation erode the amount earned?..Can I have a calculation which considers the Inflation rate as well as Interest rate? What will the resultant amount received then?

    1. Yes Deep

      You will have to consider Inflation . What I suggest is that you use EXCEL to calculate this !

  18. Jasvinder says:

    thanks manish

  19. Jasvinder says:

    also how is the returns calculated? as u metioned 1-2%

  20. Jasvinder says:

    what do u suggest. Should I take out money and reinvest or continue it in SBI Magnum

    1. Take out the money and invest in better funds right now like DSP Blackrock top 100 or Quantum Long Term Equity

  21. Jasvinder says:

    Hi Manish

    I had invested in SBI magnum tax gain growth scheme – 40000/- in 2010 the NAV was 57.80. Now the NAV is 59.3. Not too sure what will be my returns.
    Can You pls guide

    1. Its going to be very small like 1-2%

  22. atanu says:

    Thank you for your article. Last part of saving- “(20,000) per month for starting 2 yrs and then let it grow for rest 33 yrs…. His Wealth will be 9.24 Crores (Rs. 92.4 million) at the end of 35 yrs.” are my targeting path.
    I am very interest on this type of investment. But my situation is , I can invest 2000(two thousand) only per month for starting 2 yrs and then let it grow for rest 33 yrs. Because my job is not stable and family health situation. But I’ll not withdraw my investment, rather remain strict to fulfill my own target. I think many people are under this type of situation.
    If my target 1.027 Crore after 35 yrs from starting date , please tell whether following figure are right or not.
    Considering 9.24 Crores /9=1.027 Crores, are my target after 35 yrs. So monthly invest 20,000/9=rs 2222 for starting 2 yrs.
    If this is correct, Please reply whether I’ll consider this or give right way to fulfill my target(1.027 Crores).
    Please also tell, If above are correct then, whether n(number) multiplication are correct or not. i.e.- Target (1.027*2)= 2.054 Crores, so starting 2 yrs invest per month=2222*2=rs 4444 . Considering my requirement please reply. Many Thanks for your reply.

    1. Yes , if you invest 2-3k per month, you can achieve 1.027 crores in 35 yrs

      1. atanu says:

        Thanks, for your reply.
        Your reply- “Yes , if you invest 2-3k per month, you can achieve 1.027 crores in 35 yrs”. My query is – ‘if I invest 2-3k per month, ‘ONLY FIRST 2(TWO) YRS, AND THEN STOP SIP’ and then ‘LET IT GROW FOR REST 33 YRS’, whether I can achieve 1.027 crores in 35 yrs or not”.
        If I choose hdfc top 200 and reliance gold savings fund(G) as mixed investment(i.e.- hdfc top 200=1500/per month, reliance gold savings fund(G)=800/per month, total=2300/per month) and will invest only first 2(TWO) yrs, and then stop SIP and then let it grow for rest 33 yrs, then please reply-
        Are these funds choosing are precised Or please advice giving specific fund name for me.
        Again many many thanks for this article and also your valuable reply.
        Thank you.

        1. NO , in that case the amount required to invest for first 2 yrs will be very high like 20-30k

  23. Puneet says:

    Hi Manish,

    A very good article indeed and very informatiove too..

    Am 31 now and can invest around 10k for next 10 yrs, can you suggest me a good deal here.


    1. JUst start your SIP’s in good long term mutual funds .

      1. Puneet says:

        Any suggestions on that, i mean as you have knowledge about same – can you suggest on any good one.


        1. HDFC prudence is a good one , and DSPBR top 100 is another

          1. Puneet says:

            Thanks Manish 🙂 – going for it.

  24. vivek says:

    Hi Manish,

    thanks for such a informative article.
    I am 31 & can invest 10k per month towards generating the corpus required for retirement.please suggest me some good MF’s where i can invest for next 27 years
    which gives 12-15 CAGR. also i am not frequent watcher of fund performance & will like to continue with same funds for the whole accumulation period.

    1. You can look at INDEX Funds

  25. Arif says:

    Hello Manish,

    First, I’d like to thank you for creating such a beautiful and informative blog.

    I am really very new to all this savings, and I’m ashamed on myself that I have not saved anything (0.00) till date and I’m 28 years old now 🙁

    But with a new hope, I’d like to save/invest money, 20,000/- at max per month. Can you please help me, and let me tell you that I have 0% knowledge in this field. i really mean 0% knowledge.

    Let me tell you my dream for my family– it really hurts to put down here. I would like to purchase a house in coming 4-5 years. So, can you please tell me how I can invest the amount for next 4-5 years as I can at least gather some good amount for my down-payment.

    I know, I’ve put a lot of questions here for you, but I’m stuck with my life in these matters. Messaging you with a hope brother, please suggest me. Please.

    Thank you again, Manish.


    1. Hi Arif

      Good to hear that you would like to learn things and want to move forward. There is no big deal if you have 0% knowledge and have not done things till now . Let me give you a small plan , so that you can follow it .

      Step 1 : At this moment itself, Start a recurring deposit of Rs 10,000 per month in case you have a netbanking account . This will make sure you START .
      Step 2 : I want you to read my two books – Order them from flipkart and over next 30 days finish them. Those 2 books will put from on the right path . Here are the links

      Step 3 : Go through the old articles of this blog and keep reading and ask all your questions in comments section
      Step 4 – You can also use to ask your queries.

      The point is , you have to DEDICATE yourself to this with full heart and I guarantee you results !


      1. Arif says:

        Hi Manish,

        I wasn’t expecting a reply in such a short time. Thank you so much for the reply, happy to see someone who is really trying to help people like me.

        I’ll definitely go ahead and start a recurring deposit of Rs 10,000 per month. I’ll order both the books to understand how it works. I’m regularly checking your articles now 🙂 and I’ll surely use your forum.

        Thanks again for the support, Manish.


        1. Good to hear that .. i would say make a start and then build upon it !

  26. Ayush says:

    Hi Manish

    I must say very nice article.

    I am 23 and can invest about 10k/mon (may 20k for first 2yrs). Could you suggest a plan for me, I am completely new to investing. It will be more helpful and realistic if you also include inflation and other such factors which will decrease the real value of money after 35 yr, as goods will be more expensive..etc.

    Thanks a lot.


    1. Ayush

      This article is pretty old now , can you pose your exact question and I should be able to help you on numbers !

  27. raj says:

    Thanks for the excellent post Manish..I am planning to invest for a long term in these funds..SBI Emerging business fund, ICICI prudential FMCG fund and Birla sunlife gennext fund..Can you please guide me whether my choice was correct or not?

    1. I would rather have choosen most generic equity diversified funds .. what are the rationale behind choosing these funds ?

      1. raj says:

        I have seen that they are performing better during the last 3 yrs..frankly i dont have much idea about the funds as i am a beginner..So do you think that it’s better for me to invest in funds like franklin india bluechip,dsp br quity,hdfc prudence, hdfc top 200,icici pru dynamic? by the way yesterday only I have ordered your book from homeshop18 🙂

        1. Yes, you can invest in these funds your mentioned ! and great to hear that you grabbed a copy of my book

  28. Mirchi Seth says:

    Dear Manish, you have explained the power of compounding in a very simple manner- I really appreciate that. I was going through the comments section below and noticed that you have prescribed investing in Mutual Funds via SIPs in most if not all cases.Are these mutual funds really so worthy of trust? further, how should one pick a reliable MF as against invest in a stock directly, since background research would be needed in both the cases?

    1. I suggest first you understand how equity worth .. grab my book and read the 3rd chapter.. Then you will understand why I recommend that !

  29. jitendra kumar says:

    Sir , I have taken a “Profit Plus” LIC policy ( Fund type-Balance) in 2007. I have already paid all five Annual PREMIUM each of Rs 15000 ( So, total amount I paid Rs 75000). Should I continue this policy …?? or discountiue this policy and money get reinvested in any good Long term (10-15 years) Mutual fund ??

    1. Better get out of it and reinvest the money in mutual funds.

      1. jitendra says:

        Thanku Manish ji

  30. aamadmi says:

    Hi Manish,
    I had started SIP in the following funds since Jan’2007. I was a newbie and collected these couple of funds.
    (8) Quantum Long Term Equity- GROWTH

    Currently SIPs are running in the funds listed in (8), (4), (3), and (2) only and stopped the others funds but continuing holding them.
    Do you think it will be wise to redeemed those funds whose SIPs has been stopped and put the proceeds in the remaining SIPs?

    1. yes ,better redeem which you have stopped and clean the portfolio , Just continue your SIP , you are on right path

  31. Rashmi Singh says:

    Hi Manish,

    I came across your site today itself, and have read quite a bit since then…
    I have invested in number of Mutual Funds:
    Rs 2000 in HDFC Tax Saver (Dividend Payout), Rs 2000 in Franklinn India Prima Plus, Rs 1500 ICICI Pru Dynamic Plan , All Dividend options. I also have a Reliance Retail plan that I took as a growth option in 2007 and got it converted to Dividend in 2010 ( 🙁 at my broker’s suggestions). I can see that I am not gaining through these funds. Yes, a few of them perform well at times, but since long there has been not much ‘sizeable’ gain.
    I am wondering if my investments are fine…
    I just do not trust agents in the market ‘coz I have realized all that they are interested in doing is to gain themselves.
    Besides these investments I have also invested a few thousands in Tata Equity P/E fund and birla sunlife frontline equity.
    And yes, I am 29.
    Though I take pride in investing at the right time. I don’t know if I have done the right thing with my money.
    1. What’s your take on these investments?
    2. I want to switch to growth option in my Reliance fund. Would that be fine?
    See if you may help me 🙂

    1. Rashmi

      Actually you have taken good funds , but your are too active ! . You are judging them for last 4 yrs performance , which depends on 4 yrs action of stock market , which has been pretty bad and one of the rarest events (5 yrs of bad performance is rare compared to history) . Just stay calm and keep investing per month in these funds, you will reap good benefits in few more years.

      And limit your funds to maximum 4-5 , no need of more than that


      1. Rashmi Singh says:

        Thanks Manish,

        But you didn’t suggest if I should convert my Reliance fund into a growth option. Or should I continue with Dividend option. None of the funds that I have, have growth options.


  32. sam says:

    Hi Manish,
    Very helpful in all ways..Big thanks to you for all information..We all wish you keep giving good info to the world like this..
    I have a small doubt:
    Im 26 and I want to invest around 5K as mentioned in this article for 10 years and i want it to grow later..can you please suggest best possibilities..
    Thank again.

    1. JUst go for mutual funds .. choose 2-3 equity funds like HDFC Equity , DSPBR top 100

  33. Minu says:

    Hi Manish,
    I liked the above article . The numbers are very mouth watering. But did not understand the math behind it. Can u share any calculator by which I could estimate my retirement corpus ?


  34. kalyani says:

    I am 40 years want to know which is the better option for retirement as to start with PPF with 1 lac per year or invest the same amount in blue chip (have fair knowledge of stock trading)or any other options to generate same or more corpus as PPF after 15 years.

    1. If you dont act like a stock trader, only then should you put money in balanced or pure equity funds for long term ,

  35. Raman says:

    Good information, I will work on it.

  36. It is a eye opener.Even people with small salaries aim big and at least they can make their next generations financially more comfortable.
    Nice article and this kind of articles in fact make your blog unique.Keep the good work on and thank you for sharing.

  37. Robin says:

    Hai Manish,
    It was an eye opener for me ,am new in this investment segment,iwas thinking of LIC Jeevan Tharang as an investment for my child and a pension scheme for me,after reading ur article am confused,Iwas planning to pay 1.25lacs per year for 15yrs.Pls advise me to take a wise dicision to get a proper return.

    1. robin

      better not invest in any POLICY . just start your SIP in few good mutual funds , thats all !


  38. pankaj says:

    Awesome article, I would have read atleast 50 of your articles but this was one is the best…….:)

    1. Pankaj

      Had written it long back 🙂

  39. Sanjay says:


    I am new to your website and have just started reading the posts.

    I just wanted to comment on your statement in this articale “Equities are extremely risky in short term, but its almost not at all risky in long term…”. While I want to beleive in that, I have seen exactly opposite happening to Japanese stock index (Nikkei 225). Please comment on the same and let me know if I am missing anything…


    1. Sanjay

      That statement is considering Indian perspective only .. Japan market is way too developed and india will be tehre after 25-30 yrs .. This is agian a personal view , based on your understanding you might not agree to this .

      Also one has to consider average situation ,m what you have mentioned is not an average situation , how much of that incident has happened ?


  40. Madhukar says:

    Manish bhai , thanx a lot. m 26 years old , and m doin SIP of 6k per mnth(and planning 2 increase it to 10k in nxt yr). But i was worried abt building a gud amt of wealth frm dis much amt of SIP . Of course i do invest money in other thngs also , but u hav explained me dat this much amt can really build up a huge amt .
    U r articls r extremely useful n easy 2 understand. Keep doing tis wrk
    May God wish u with gud health and prosperity….
    Once again, thnx a lot…. 🙂

    1. Madhukar

      Dont worry for this small amount .. this will grow big and anywyas in coming years you will increase your ocontribution also .. so over next 20-30 yrs this will be a big amount


  41. Zainab says:

    Hi Manish,

    I find your topics very interesting. They aer also very simple to understand. I am also very new to the investments world. I would like if you can share the ebook; that you shared with Prashant; with me as well. Trying to learn more in this space before deciding with my portfolio 🙂

  42. Suhas says:

    ” he should invest Rs 6,420 per month for 10 yrs and then leave the money to grow for rest of 25 yrs. And he can generate wealth of Rs 7.43 Crores”

    What exactly do you mean ‘leave the money to grow”

    1. Shiva says:

      It means 2 things. You can stop investing that monthly contribution of 6420 rs. Then leave the corpus untouched for the next 25 years.

    2. Suhas

      It means not making the additional investments but just let the money grow in the investments .. Dont take it out for next 25 yrs


  43. Meensi says:


    Nice topic and really its an eye-opener.
    I had invested in Sundaram BNP Paribas Tax Saver Open ended growth funded 4 years ago.. but the NAV is going down. Is it better to close this fund?
    Please advise on this.

    I wanted to invest in Diversified Equity funds. I can save 5000 for investment. Please suggest me a good funds.

    Thanks in advance..

    1. Meensi

      The NAV are going down from what you bought ? Or its just going up and down and not moving up ? Because Sundaram tax saver is a good fund over all , dont judge it with its short term performance .

      HDFC Tax saver is one good fund .


      1. Meensi says:


        When I bought it, the NAV was 44 to 45 and now I guess its 42.

        1. Meensi

          thats a very small fall , NAV coming down from 45 to 42 does not mean anything , its just volatlity and nothing else . You should wait for more time to look at its performance, the markets are not doing well in general , so the fund is also reflecting that , see other funds performance and compare it with this fund .


  44. Nirmal says:

    Can we submit withdrawal form after 1 year investment of 500 per month?
    what would be return in Superannuation Fund contribution?

    1. Nirmal

      you need to complete atleast 3 yrs to get that .


  45. Praveen says:

    Very informative..thanks Manish..i am new to Mutual funds. I few doubts. To invest in different MFs and pay in SIP , should i have to open MF accounts with different companies? Can you plz suggest me few good MFs for a long term investment ? What is the procedure for withdrawing from a MF ?

    1. Praveen

      For mutual fund you dont need any seperate kind of account, you can use your existing demat account , or you can directly invest through agent or directly . You can use a withdrawal form with the mutual funds and deposit it with CAMS or Karvy office


  46. Irfan shaikh says:

    Hi Manish,
    this is irfan i read this article and its realy shocking to me. i dont have any knowledge about investments and i am trying to get it through your blog . i am reguler reader of your blog. is it realy possible??????????
    how can i genarate 25 lac in 10year????


    please suggest some stratorgy.

    1. Irfan

      Yes , its very much possible .. I am sure you beleive maths 🙂


  47. RK says:

    Excellent articles Manish.. and especially this one.
    Thank you so much for all those informative, logical and *free* advices. Hope you are here for the long term as well, similar to how you suggest while investing 😉

    1. RK

      Yea 🙂 . Keep reading 🙂


  48. binod mahanta says:

    Dear Sir
    I have zero knowledge of equity fund or any financial planning.So i want to know something about it.
    First of all supose I invest 5000 per month for 35 year.Is it compulsory to invset 5000 per month like any insurance policy(where if i donot pay the premium policy will be laps) or it is my will to invest or not?

    Secondly at pressent I am Unmarried so I can invest 10000-15000 per month for 1-2 year. then after i may not invest that amount of money. that may reduce to 5000- 6000 per month is that will be any problem.

    Again i may need money in future lets say after 10yr can i withdrow my money and if yes how it will effect the plan.

    And lastly from where i can invest in equity fund

    Please clarify my doubts.

    Thanks & Regards
    Binod Bihari Mahanta

    1. Binod

      You can invest in equity through two ways

      1. Direct invest in stocks , like buying 100 shares of reliance yourself from demat
      2. Investing through Mutualfunds .

      Now option 2 is recommended to you . You can invest lumpsum in one go or every money using SIP (SIP is nothing but monthly investment) , Its not complusory to keep investing in Mutual f unds , so you can stop your payment later , you can also withdraw in Mutual funds when you need.

      You can invest 10000 right now per month and then reduce it later, so for now you can start a SIP payment of 10k per month for 1 yrs.

      When you buy MF , there will be form where you will have option of saying that you want to invest 10k per month , and you will give bank details there and have ECS mandate which means 10k per month will automatically go from your account for MF investment , This will continue for 1yr if you chose 1 yrs as tenure .

      After that you can again start it for a lesser amount , ask your basic doubts on the forum if you want fast answers

  49. nihal says:

    Hi Manish,
    How about this idea??….Im young..say I have a sum of 15,000,00,but my house costs say…50,000,00! I invest lump sum in mutual fund-equity diversified(at a fair PE market level) and I do an SWP of 7000 P.M to pay off the EMI’s on a 30 year loan…and remaining amount I pay while working…by the time the 200 +(more than 15 years)withdrawals are done my 15,000,00 will definitely reach more than the value of the house…and the surplus will be more than the EMI as well…(no calculations done…) can such a long term risk be taken? I will have a house,wealth from surplus units.. Roughly speaking..these numbers are not calculated (can we take a risk of an amount that is a multiple of our original value)? So it can applied to smaller values with smaller SWPs

    1. Nihal

      Nice concept . Its more of financing your EMI with unstable inflow of money which comes from Mutual funds, the concept looks good , just that some number play has to be done to see how feasible it is , i would recommend you give it a try , as you have coined this idea 🙂 . The only issues I see here is the worst case scenarios and keeping the mind cool and not loosing the confidence on the whole idea .


  50. Sarang Acharya says:

    Hi Manish,
    It’s a great article and gives a lot of knowledge. If you have enough time then please guide me too as you always do.

    I am 26 now i earn around 3.50 lac’s annually after all expenses i can save up to 10k a month.I dont have any arrangements for emergencies please suggest me how much to invest for how many years and in what Mutual funds i am completely confused as there are so many AMC’s and their mutual funds.

    Sarang Acharya.
    System Administrator

    1. Sarang

      You should first keep aside atleast 3-4 months of expenses in Emergency fund . You should plan each of your goal then , You should meet a financial planner for this .


  51. Banty says:

    Hi Manish…

    I feel great after reading your artical….. its really increadible….
    But practically is it possible really…. sorry i mean to say can it be happen really….

    please advice me for my 1st investment in mutual fund…

    i m 26 years old… i want to invest Rs.3000 per month in SBI Magnum taxgain (growth) for say atleast 5 years from this month… how much money i will get after 5years… can you tell me plz… and also tell me is there any best option to invest this amount other than SBI Magnum taxgain (growth).

    waiting for your early reply….

    1. Banty

      You will get 2.47 lacs at the end of 5 yrs , assuming 12% yearly return (1% monthly , 60 payments) .

      >>> 3000 * (1.01) * ((1.01 ** 60 – 1))/.01

      Also make sure you understand that over the long term this can definately happen only when you have discipline in investing.


      1. Banty says:

        thanx manish…
        is this amont of Rs.2.47 lacs taxable.. i mean should i have to pay tax for it….
        if i will invest this Rs. 2.47 lacs for another 5 years… how much will i get after that…. plz tell me…

  52. Prithvi says:

    Hi Manish Bhai,

    The problem is the greed in me which makes me feel more happy when I make benefits from trading since I feel progress. Being an investor, I believe it is very little progress as such since I will be tracking the market just for the news on my stocks and accumulating more when time comes. But trading makes me more active in market and feel I am doing good in markets when I make profit.

    As you suggest I should not be wearing two hats…I would prefer the investor one itself then considering the long term story of stock markets…

    Can you suggest me some stocks to look for investment keeping another 6-8yrs horizon.
    Current holdings include Bharti Airtel, Reliance Industries, Reliance Mediaworks, Maytas Infra, Bank of India and Country Club. Please let me know whether these are good for long term according to your view.


    1. Prithvi

      I dont consider myself to be good enough to give stock suggestion truely speaking .. Better you do some value investing with some mid cap stocks are the right time when there is a crash next time , follow rohit chauhan blog to learn more .


  53. Prithvi says:

    Hi Man,

    I am 28yrs old this year.
    I had been investing on mutual funds 5k per month for last two years and had also plan to continue for until retire.
    But my problem is I had been trading for last 2-3 years also. I haf made ok profit in stocks. I am confused now whether I should continue to trade or convert myself to be an investor? I can hold for long term but should I try doing both? What are your picks for trading and investing as of today?


    1. Prithvi

      I dont think you should wear both hats of investor + Trader . If you are not able to make more returns from trading than investing , then better be an investor.


  54. Harpreet says:

    Thanks Manish. I am still figuring this all out. Didnt had anyone to clear out my doubts but you are exceptional. I am 25 and will going to step into the investment world for the first time so had to make sure I am understanding things I am stepping into. I can use your expertise to some extent. All I have for now is a PPF account (each for me and my financee) opened around a year back. I am currently in US and save around INR 1Lakh/month (Post tax and monthly expenses). To start with, I am going to have a insurance (LIC) and Equity diversified mutual fund (HDFC Top 200-G and DSPBR Equity) as my first invesment for a period of around 6-7 yrs (It can extent, depends). Another SIP for a long term perspective (retirement/children Future planning perspective). Thats all I can think of for now. I am also going to start a SIP in one of these funds for my retirement (25 more yrs to go). Money is not a concern at this point so a average risk taker. Have an objective buying a house in another 6 yrs (I know this needs some serious investment stratagey). What do you think should be the portfoli structure in this case. I know I can take some risk now before I could start shifting into more debt than equity.


    1. Harpreet

      Looks good overall

      Make sure you take a term policy for insurance and not an endowment plan . take it if you have financial dependents only .

      Better invest in balanced funds for house down payment 🙂


  55. Harpreet says:


    One quick question, how can we be sure of a funds/company’s credibility. I mean what if I keep investing in HDFC Top 200-G Mutual Fund for say around 20 yrs, but company gets bankrupt or something by say 15 yrs. Does my clarification holds water? Also, what do we mean by revisiting our portfolio? I mean I understand that it means to re-evaluate present situation and alter portfolio as per to that. But how this actually implies. Does this mean that if I am investing say 5000/month as SIP in Mutual funds and after 5 yrs I come to know that I need to reduce my investment in equity, I should reduce or stop investing in Mutual fund anymore. Please suggest.

    1. Harpreet

      What do you mean by mutual funds bankruptcy ? Its not like that one fine day you come to know that they are bankrupt . they are not a company with product , its a services company . They take your money and invest it on your behalf and you can see how it performs each day , its not that one day all money will vanish .

      So if all the money is going down drain , but it will be slowly happening , if the fund is not performing well . in which case you always have the chance of taking your money out . revisiting your portfolio means looking at it every year and making sure that it still holds water . it means stopping , increasing , adding investments


  56. sandeep says:

    🙂 the encouraging article and confusing calculations….I’m 33 yrs now and had started investing in small amounts from 22 yrs onwards and hv some money accumulated in tune of what you are saying above “he should invest Rs 6,420 per month for 10 yrs and then leave the money to grow for rest of 25 yrs. And he can generate wealth of Rs 7.43 Crores” i.e. investment equivalent of 7-8 lks that i can leave it to grow 🙂

    i’ve probably 27 yrs of service still left and after using calculators one of those financial websites my retiremetn corpus should be about 7 crs……so what should i do to let this money grow, i’m sure its easier said than done….i’m confused about what would i have to do with this 7 lks to make it 7 crs in next 25yrs…obviously just keeping in MF would not do or will it ?

    1. Sandeep

      Yea .. 7 lacs in 7 crores in 25 yrs will take more energy . Its close to 20% return which is very tough . You either have to be very aggresive or do some more contribution per month (this will be tough) .


  57. kavita kamat says:

    hi manish,

    after reading ur blogs about MF investments, i have started sip’s for the following mfs ie. Sundaram Smile (2000), Dsp Tiger (2000), Reliance Growth & Vision (1000 each) , HDFC 200 (2000) and Franklin Blue Chip (2000) for 3 yrs. as a housewife, can u tell me whether i have invested correctly if invested late.


    1. Kavita

      Your choices look good overall . But remember that these are equity mutual funds and you should be aware of the risks involved. Please make a mind to invest for long term in these (5-7 yrs atleast) . I am not saying that these will make losses, but there is always a chance . But over long term , they should give you good returns . also you can stop your SIP any time you want , so keep an eye on the performance over time .


  58. Purna says:


    I have a doubt, if the below statement to become true “If a 25 yrs old invest 5k per month with discipline in MF with SIP for 30 yrs regularly without thinking about short term fluctuations in Stock markets , His corpus will be around 3.5 Crores assuming return of 15% CAGR (Indian markets returned 17% in last 29 years . ”
    What are the Sensex/Nifty levels by that time? would it be in lakshs of points(since currently its in thousands). Will this really be true? I sense some where we are only looking at the numbers but not the reality. to realize this india has to be in to in 12 trillion dollar econony or more than that in next 20 years (currently it is 1 trillion dollar economy).
    Excuse my ignorance if my question makes no sense, *** past history may or may not repeat**… -:)

    1. Purna

      You have asked a valid question . Market performance for last 20-30 yrs will not replicate in same way for another 20-30 yrs for sure . it will be less .In my last comment , some other things were also there which I did not mention , but assumed it to be there

      1. Proper asset allocation and portfolio rebalancing every year.
      2. We are talking about Mutual funds here for investment and we have to keep reviewing the performance every year so discard bad funds and keep adding new funds .

      The return from MF does not need to be same like index , MF makes sure they pick undervalued stocks and then keeps churning them every single time , in this process the fund might get returns but it might be the case that index does not move . So yes .. I should have originally written “mutual funds invesment” and not just “stock market investments” . Does it make sense now to some extent .

      Very sharp eyes I must say .. thats good 🙂


  59. Prashant says:

    Hi Manish,
    Could you pls tell me how much risky do you think investing in TOP ELSS for period of 20 yrs if we take 0% for PPF?

    Also I want to know my age is 27 (married) what praportion should I allocate to PPF and ELSS. I like to take risk. Appreciate your response. Thank you

    1. manish says:


      If we change your question to a equivalent question which is very different , you have to answer that “Where will be our economy after 20 yrs ? Will we be much ahead of what we are now ? Will Infosys , reliance , bharti airtel and other big company and other mid sized companies which are India’s furture , will they progress ? ”

      The reason is that they are all where your money will be invested in ? Equity is nothing but your ownership in these companies, this country .

      So now you know how much risk is there . Very very less . Go ahead 🙂
      If you are aggressive enough , the apart from your PF (EPF) , you can invest all in Equity .

      What do you think ? Do you like direct investing ? you know ETF’s ?


      1. Prashant says:

        Hi Manish,
        Thannk you for the answer. I am new to investment world, just started. I dont know which is better direct investment or through MF for a common man ( not much knowledge of stocks). could you pls share me what is ETF’s?

        Anyway I recently joined your blog. And really valuable information getting about investments. I really appreciate your information. Thank you.

        1. manish says:

          its great that you dont know much , You can start from scratch and you are previleged that your mind is fresh 🙂 . read about ETF :

          Regarding stock trading , dont jump into it . believe me going slow will help .

          You need a Ebook written by me to start ?


          1. Prashant says:

            Yes,Thanks a lot. could you pls share to me your Ebook? I would really finding interesting day by day in the equity.
            Thanks a lot.

          2. Sameer Goel says:

            Hi Manish,

            Could you please provide me that ebook.


  60. Gaurav says:

    If still want to go go for lic least chances of least losses

    1. manish says:

      “least chances of least losses”

      That actually means “chances of high losses” . How do you prove your argument ?


  61. Gaurav says:

    But there is high risk in this

    1. manish says:

      Why ? Reason ?

  62. Manish Chauhan says:


    Nice to hear from you .. I am glad that you are liking the article .. Seems like you are a new to Jagoinvestor Family .

    Welcome on board 🙂


  63. Deep Sukhwani says:


    You know what??

    I am your fan!

    I am following your blog, right from having read this post!

    YOu are SERIOUSLY AN EYE OPENER to me in the world of finance and investing..

    Deep S

  64. Manish Chauhan says:


    yeah .. early investing is the key 🙂 .. One who starts early has to do the least 🙂


  65. RD says:

    lovely….specially the last part of saving 20K for 2 years. really nice. Excellent

  66. Manish Chauhan says:


    The interest earned is the number figured out from the increase in worth not vice versa.

    When i say a person will earn interest at 15% , it means he can expect his 10,000 invested becomes 11,500 . Or if his 10,000 becomes 20,000 in 4 yrs, his interest 18.92% .

    So interest can only be expected in equity .Only in Debt like FD or Liquid funds we can be pretty sure about returns .


  67. rahul says:

    Hey Manish,

    Exceptional work, keep it up!

    I am not sure about this interest thing. As far as I know, if we invest in Equity Diversified Mutual funds, over a period of time the NAV goes up or comes down based on the sensex, but where does this interest come into picture?

    Please clarify.


  68. Manish Chauhan says:

    If you had to retire at 45 , you should have started working and thinking about it just after you started working at 25 (assuming) . That could have been some help .

    Dont try trading unless you understand what it means and it excites you .


  69. Anu says:

    Thanks a lot for your guidance and comments. Write now i am 30… was thinking to retire at 45. anyways i guess i have to work till 60. haha. Thanks for the link i will do some home work. I am not yet confident in trading so i will leave it.

  70. Anu says:

    I wish i had read ur comments earlier. However, I can always start. but manish would u be able to tell me if i want to generate 7 crores in 15 yrs how much should i invest and if possible which kind of funds.

  71. Manish Chauhan says:


    You are trying to acheive a very tough target . 7 crores in 15 years will require a lot of monthly contribution . The best thing i can think of is SIP in Mutual funds , assuming you are not into stocks full time and are doing another job .

    For 15 yrs , you can expect a return of 15% . With that much return you would require monthly contribution of Rs 1.2 lacs for next 15 yrs .

    is that your retirement Corpus ? What is your age ? Cant you target 7 crore in next 30 yrs , considering you are below 30 .

    If you increare you time horizon to 30 yrs, then you can expect a more higher return like 18-19% . and then you will only be required to invest around 7k per month .

    Here is a SIP calculator , do the maths and see the results .

    Note : until you are full time and dedicated to Investing in Equity , you should not expect more returns that what i discussed above .

    Successful Traders can generate around 30-40 returns per year CAGR . So if you become a successful trader who can generate that much return per year , then starting with 10 lacs , you can grow it to 7 crores in 15 yrs . But remember that trading is not childs play , 97-98% people who trade loose money . Its not an easy thing .

    Anyone who want to become a serious trader has to learn it for atleast 2-3 yrs and still there is no guarantee of becoming successful .

    I hope you got your answer .


  72. Manish Chauhan says:


    Thanks for your comments …


  73. Anonymous says:

    Hi Manish,

    I am new to investing. After reading all your posts, all i could say about you is AWESOME!!

    Thats a gr8 work dude…

  74. Anonymous says:

    Thanks Manish! 🙂

  75. Manish Chauhan says:

    @Anonymous …

    MF i am reffering to are Equity Diversified Mutual funds , ELSS (tax saving funds) also come in that category .

    What person thinks as bad sometimes is a very good thing . Why do you think that 3 years lock in period is bad . Just because it will lock your money and incase you need it , you will not be able to take it out ?

    Though its a valid reason ,but not a big one ..

    Some things to remember :

    1. You tax savings should be linked to your long term goals … 3 yrs is the minimum your mney will be locked in any tax saving product .

    2. Choose a good mutual funds not on the basis of 1-2 yrs returns (short term return) , but atleast 5 yrs returns or Since Inception returns .. because you want to judge them on long term performance .

    As a case study ..

    If a 25 yrs old invest 5k per month with discipline in MF with SIP for 30 yrs regularly without thinking about short term fluctuations in Stock markets , His corpus will be around 3.5 Crores assuming return of 15% CAGR (Indian markets returned 17% in last 29 years .


    1. Asset Allocation
    2. Portfolio rebalancing between Equity and Debt when it gets disbalanced
    3. Discipline in Investing

    When you apply all these things , then you dont have to think much over long term … infact not at all … You are bound to succeed .

    What eles do you want to know ? Did my explanation Help ?

  76. Anonymous says:

    Hi Manish,

    Its really an eye opener for me on how small and regular investments can create such a huge fortune !!!

    All through your posts you have mentioned, investing in equities(MF) a better option. Can u please list which category of MF’s you are referring to. Tax saving schemes are not a good option,cosidering the lock in of 3-yrs :-(. But how to generate a fortune?

    Appreciate if you could clarify by a case study aproach.

    Thanks a Lot!


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