The One Crore in 10 Years Goal.
Everyone has thought about it but not many mention it and way fewer achieve it. Let me explain.
Once you define a goal two things become clear, the time period and then the goal value. Here you have 10 years or 120 months to achieve this goal which is your time period or your saving/investing phase. Also the amount you have to accumulate within 10 years or the future value which is 1 crore.
If you think you are going to make this happen by just saving an amount every month you are mistaken. We need help in compounding and some higher returns from investing. For this case let's take the average long term return of equity mutual funds which is 15 percent.
The intention here is to find out how much you have to save/invest every month to reach 1 crore. Here enters the friendly excel/google sheet function called pmt.
Once you type this function the following inputs are requested to be entered inside the brackets with commas separating each value.
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Firstly, 15 percent as our rate of return but since we are trying to calculate the monthly investing amount we divide it by 12. Secondly, 10 years to goal but again since we are trying to calculate the monthly investing amount we multiply it by 12.
The present value has to be kept 0 and the future value is our goal value of 1 crore. Don't miss any zeros. At last enter 1 and close the bracket. Your answer will be displayed right about now.
35,886.
So if you invest 35,886 every month for the next 10 years in an equity mutual fund giving 15 percent annual returns over the period, then you will be able to achieve this goal easily.
You can replace the entered values and play with it based on your use case.
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