Expert view: Simple questions do not always have simple answers. Consider, for instance, the question: How can one make ₹1 crore in 10 years through investments?
For common investors, the idea of reaching ₹1 crore is a holy grail. The pursuit of this milestone often puts them in a state of confusion – how to build the ideal portfolio, how much to allocate to equities, gold and debt, what the monthly SIP should be, and how taxes will impact returns.
In an interaction with Mint, Archit Doshi, Fund Manager – Non Discretionary Solutions at PL (Prabhudas Lilladher) AMC, answered these fundamental questions about investing. Here are edited excerpts:
What could be an ideal portfolio to achieve this goal of making ₹1 crore in 10 years?
An ideal portfolio to build ₹1 crore in 10 years needs growth with some amount of safety.
Think of it as three strategic components working together.
The foundation is diversified equity mutual funds-75% of your portfolio.
These are not just any mutual funds; the allocation should have a tilt toward small and mid-cap companies.
Why? Because over a decade-long horizon, smaller companies tend to grow faster.
Diversification across sectors protects you from betting the farm on one industry.
The stability layer is 10% in debt and debt-like instruments. This provides a crucial safety net.
If you need emergency liquidity, this portion covers you. When markets tumble, this cushion helps you avoid panic selling and locks in discipline. The third layer is 15% in gold.
Gold does not follow stocks; it marches to its own beat. Historically, gold offers better inflation protection than debt, and its low correlation with equities significantly reduces overall portfolio volatility and risk.
Together, this 75-10-15 mix balances your ambition to build wealth with the prudence needed to manage real-world financial risks. It is aggressive enough for growth, stable enough for peace of mind.
What part of a portfolio should be exposed to equities, gold, and debt?
Here’s the precise breakdown for every ₹100 you invest: ₹75 goes to diversified equity mutual funds with a small and mid-cap tilt, ₹10 goes to debt instruments for immediate liquidity needs, and ₹15 goes to gold.
Why 75% in equities? Over the past 10 years, equities have been your wealth engine. India’s economic growth, corporate earnings, and market expansion make equities the best long-term bet.
The small and mid-cap tilt amplifies growth potential-smaller companies are expected to scale faster as India continues to develop economically.
Why 10% in debt? Life happens unexpectedly. Medical emergencies, job transitions, or investment opportunities arise.
This 10% sits ready as debt funds. You do not need more because your 10-year time horizon is sufficiently long to recover from volatility without affecting your core portfolio.
Why 15% in gold? Gold has historically behaved differently from stocks and debt. When equities stumble, gold often holds steady.
Historically, gold delivers better returns than debt funds while protecting purchasing power.
Its low correlation makes your portfolio more resilient. This 75-10-15 allocation is calibrated specifically for a decade-long wealth-building journey.
What about the tax angle?
Taxes can significantly impact your final returns, but smart structuring can mitigate their effects.
Here’s the key distinction. Equity mutual funds held for more than one year are subject to long-term capital gains (LTCG) tax at a 12.5% base rate, which, when combined with surcharge and cess, works out to approximately 14.95%. Sell within a year, and you pay 20% plus surcharge and cess, roughly 23.92% in total.
That 9 percentage point gap is huge over long periods. With a 10-year horizon, most of your equity gains should fall under the lower LTCG rate.
Pure debt funds, on the other hand, are taxed at your maximum marginal rate, regardless of how long you hold them.
This is where hybrids help: income-plus, arbitrage, or equity-savings funds (offered by a few Asset Management Companies, or AMCs, that are structured with a debt tilt) can provide a debt-like return journey but qualify for equity-like taxation (approximately 14.95%) after two years, making them more tax-efficient than pure debt.
Gold, when held for more than 12 months, is also eligible for the same 14.95% LTCG rate.
So, in the non-equity bucket, the role is split: some pure debt for emergency liquidity and short-term needs, and some hybrids for better post-tax outcomes, with gold primarily providing diversification and inflation protection.
Over a 10-year period, this mix enables the overall portfolio to reasonably target gross returns of approximately 12% or more and still achieve a rate of return slightly above 10% after taxes.
By staying invested for the long term and blending equity, hybrids, pure debt, and gold thoughtfully, more of what your money earns stays with you.
What about the monthly SIP amount?
The monthly investment amount required is approximately ₹50,000. Over 10 years, that totals ₹60 lakhs of your own money invested into the market.
Now here is where compound growth does the heavy lifting: those ₹60 lakhs grow into ₹1 crore.
The remaining ₹40 lakhs comes from market returns and the power of staying invested for a full decade.
Your money works for you while you sleep. Why ₹50,000 specifically?
This amount is calibrated to ensure that, given the portfolio mix and an expected post-tax return of around 10%, you reach the ₹1 crore goal in exactly 120 months. Invest less, and you fall short.
The real strength of an SIP is that it removes emotion and timing risk from the equation. Markets crash?
You still invest ₹50,000 that month-buying units at lower prices. Markets rally? Your ₹50,000 buys fewer units at higher prices.
Over the course of a decade, this consistent monthly rhythm smooths out volatility and captures both the downturns and the booms.
The discipline is the secret. Start today, commit to ₹50,000 a month for 10 years, and let compounding do what it does best.
That is how wealth builds-not through speculation, but through time and consistency.