Becoming a millionaire is almost everyone’s dream. The aim is to generate Rs 1 crore as soon as people start earning. Experts say that anyone who invests regularly can become a millionaire in 20 years. You too can become a millionaire if you make regular investments over the long term. Public Provident Fund (PPF), National Pension Scheme (NPS) and Equity Mutual Funds (MFFs) are the investments that will make you a millionaire fast.
Public Provident Fund (PPF)
PPF is the most popular long term investment tool as it provides tax free income. In addition, the amount you invest each year in PPF is eligible for tax benefit under Section 80C. However, the benefits of Section 80C are not available under the new tax regime. You can open a PPF account at a bank or a post office. Unlike RDs, the interest rate of PPF is the same in banks and post offices. This is because the government decides the interest in each quarter.
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Income from PPF
You can invest Rs 10,000 at the beginning of every month or Rs 1.2 lakh at the beginning of every year and raise Rs 1 crore in 26 years. Of the Rs 1.036 crore you raise through PPF in 26 years, 72% is interest. You have been investing only Rs 31 lakh in 26 years.
NPS
NPS has gained popularity as a retirement savings investment. Earlier it was only open to government employees but since 2009 it has been open to the public. You can deposit a certain amount or a fixed amount in NPS every month. The average return of NPS funds over the last 10 years is over 10%. By investing Rs 10,000 in NPS at the beginning of each month, you can raise Rs 1 crore in 23 years
Mutual Fund
Equity mutual funds are considered to be the best tool for creating wealth quickly. You can invest in Nifty or Sensex tracking index funds. These funds can offer about 12% CAGR in the long run. Suppose 12% is a long-term CAGR, you can save Rs 1 crore by investing Rs 10,000 at the beginning of each month in 20 years. You can achieve this goal much faster if you use zip top-up. If you increase your monthly SIP by Rs 10,000 by 10%, you can earn Rs 1 crore in 16 years.
