February 23, 2024

How to Save 10 Million Without Any Investment Knowledge

Welcome, future millionaires!

Dreaming of becoming a millionaire might seem like a lofty goal, especially if you're not well-versed in the intricacies of investing. However, achieving a milestone of 10 million in savings is not as far-fetched as it might appear, even for those without any investment knowledge in India. The key lies in understanding simple, accessible investment vehicles that can steadily grow your wealth over time. Here, we'll explore two easy paths to inch closer to your million-dollar dream, focusing on Public Provident Fund (PPF) and Index Funds.

The Power of PPF: A Safe Haven for Your Millionaire Dream

One of the safest and most straightforward routes to building your wealth is through the Public Provident Fund (PPF). A favorite among Indian savers, PPF offers an attractive combination of safety, returns, and tax savings, being backed by the Government of India. Here's how you can leverage PPF in your journey to becoming a millionaire:

• Investment Strategy: Maximize your PPF contributions by investing Rs.1,50,000 yearly or Rs.12,500 per month for both you and your spouse.
• Returns and Safety: With the current interest rate at 7.1%, PPF not only offers risk-free returns but also ensures your capital is protected under government backing.
• Projected Growth: Over a span of 15 years, your combined investment in PPF could grow to approximately Rs.81,36,418.

This method exemplifies how a disciplined approach to savings, coupled with the power of compound interest in a secure environment, can substantially grow your wealth.

Index Funds: Your Gateway to Stock Market Gains

For those willing to dip their toes into the equity market without the hassle of picking individual stocks, Index Funds present an ideal solution. By investing in an index fund, you're essentially buying a small piece of the top companies in the market, mirroring the index's performance.

• Starting Small: Begin with a monthly investment of Rs.5,000 in a well-performing index fund.
• Estimated Returns: Assuming an average annual return of 10% (which is a conservative estimate for the Indian equity market over the long term), your investment can balloon to Rs.20,89,621 over 15 years.

Index funds are an excellent way for beginners to gain exposure to the stock market's growth potential without requiring detailed market knowledge. Plus, the risk is significantly lower compared to investing in individual stocks, as your investment is diversified across many top-performing companies.

Check out the five leading diverse index funds in India for 2024, ranked by their Assets Under Management (AUM) — essentially, how much money they manage.

1. UTI Nifty 50 Index Fund
2. HDFC Index Fund - S&P BSE Sensex Plan
3. UTI Nifty200 Momentum 30 Index Fund
4. ICICI Prudential Nifty Next 50 Index Fund
5. Motilal Oswal S&P 500 Index Fund

The Path to 10 Million: Combining Forces

By combining the stability and guaranteed returns of PPF with the growth potential of Index Funds, achieving a savings goal of 10 million is within reach. Setting up a SIP (Systematic Investment Plan) in an index fund simplifies the process further, automating your monthly investments and harnessing the power of compounding.

Becoming a millionaire may seem like a distant dream, especially for those without a background in finance. However, by strategically utilizing PPF and Index Funds, and taking advantage of SIPs to automate your savings and investments, you can move steadily towards your goal of 10 million. Remember, the journey to becoming a millionaire isn't about making risky bets or having an in-depth knowledge of the financial markets; it's about consistency, discipline, and making smart, informed decisions with the tools available to you. Start your journey today, and step by step, see your millionaire dreams come to life.

Happy wealth-building!