Section VI: Income Tax and Your Financial Planning

• Ques: Become a crorepati in safe and sure way
• Ans: Key points:
  • Save and invest regularly for long term.
  • Start early so that compounding gets effective in later years.
  • Take some calculated risk by investing in mutual funds through SIP.
  • SIP in mutual funds gives you diversification in investment and averaging of cost with time.
  • If you invest Rs. 5000 p. m. for 20 years in diversified mutual fund than your Rs. 12,00,000 will become approx Rs 1,00,00,00 tax free at an equity average return of 18% p.a. or
  • Invest in a house property through 20 year home loan and the value of your home after 20 year will be more than Rs. 1,00,00,000 as you get appreciation on 100% from day one by paying only 15% of house value. The tax benefit or rentals are also there for increasing the absolute value in terms of rupee. It is safer than SIP in mutual fund.
  • Invest in PPF account of yourself, spouse and child Rs 70,000 each p. a. for 15 years @ 8% and take extension for 5 years thereby in 20 years you are very close to Rs. 1,00,00,000 adding tax benefits makes you sure crorepati with safest investment in India.
  • Becoming crorepati actually depends on compounding rate and tenure of investment, than any specialist advice.