How much do you need to invest monthly to get ₹5 cr in 30 years?

2 min read . Updated: 07 Apr 2022, 10:33 PM IST Surya Bhatia

You can have both EPF as well as PPF accounts. EPF account facility is available only to employees while PPF is an investment vehicle available to all including employees as well as self-employed / professionals

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I am 30 years old and earn ₹90,000 per month. I pay ₹20,000 towards a housing loan and ₹10,000 for a vehicle loan. I am currently investing ₹16,000 in the national pension scheme (NPS), with a 10% annual increase. I have recently started a SIP of ₹5,000. How much more should I invest in SIP to get ₹5 crore in 30 years? Also, I have been investing in NPS for the last six years. What would be the maturity value of the same upon my reaching 60 years of age?

— John Thomas

It is good to start planning for your financial goals early in life. If you start saving at the age of 30 years, you need to start investing ₹22,000 per month for the next 30 years which will accumulate to a principal amount of ₹79.2 lakh, and assuming the earnings growth at 10% you will be able to accumulate the targeted amount of ₹5 crore. This is when no incremental growth to savings has been considered.

For NPS, if there are no incremental savings and the monthly savings are ₹16,000 per month for 30 years, the principal accumulated is ₹57.6 lakh and assuming the same earnings interest of 10%, the total value at the end of 30 years will be ₹3.6 crore. And with a savings rate of 10% to annual savings, the principal corpus becomes ₹3.15 crore, and the net corpus at the end of 30 years @ 10% annual earnings rate is more than ₹9 crore.

I already have a public provident fund (PPF) account. Can I also have an employee’s provident fund (EPF) account?

— Pankaj Kumar Choube

You can have both EPF as well as PPF accounts. EPF account facility is available only to employees while PPF is an investment vehicle available to all including employees as well as self-employed / professionals. This is done to ensure that the self-employed also have an option to save with an assured fixed return which can be used to create their retirement corpus or any other long-term goal along with the additional incentive of tax saving under section 80C of the Income-Tax (I-T) act.

Surya Bhatia is managing partner of Asset Managers.

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