Investing Basics: Accumulating 50 lakhs in 10 yearsI am 41. I have an investing basics query. Income is 6 lakhs per year. I pay LIC premium of 1.2 lakhs per year. How should I invest to accumulate 50 lakhs in 10 years? I am interested in Mutual Funds, PPF, Bank FD etc. 50 lakhs accumulation in 10 years is a tough call, especially as you do not have the benefit of starting young and therefore unable to take on more risks. In the absence of details, I assume your risk tolerance may not be high, and you would rather play safe, at this stage of your life. Having said that, its doable in 15+ years, through sound & safe investment modes, without taking much risks. Here's what I suggest. Don't be taken aback by this. Its your money and it can be made to work much faster & better. Paying LIC premium of 1.2 lakhs per year is a sheer waste. Here's why and what you can do about it. 1. Surrender your current LIC policy and ask your LIC Agent to convert to a Term Plan. For about 20K annual premium, you should be able to get an LIC Term Assurance cover of Rs. 30 lakhs approx, at your age. Check this out from this LIC Insurance Premium Calculator. (Select Term Assurance Plan - Amulya Jeevan). If your LIC policy has already done 3 yrs, then you are eligible to surrender. To educate yourself on investment basics - why a term plan is much much better and why Insurance & investment should not be mixed - consider these two excellent articles. Investments? Insurance? Or both? 2. After deducting this 20K, you are left with Rs. 1 lakh annually that you can gainfully invest in a mix of PPF & conservative 5-Star rated mutual funds. I suggest a mix of 60:40 i.e. Rs. 60,000 in PPF (complete safety) and 40,000 in 5-star rated MFs (reasonable safety, over the long term of 10-15 years) 3. PPF currently gives you a compounded rate of 8%. And most top-rated diversified mutual funds have given 15-20% plus, if one stayed invested over the long term. You could consider SBI Contra, HDFC Prudence, HDFC Taxsaver, Reliance Growth. These are funds with fantastic track records (low to average risk with high to above average returns). Check out latest updated ratings for the best performing mutual funds at ValueResearchOnline Top Rated Funds. 
4. Finally, this recommended asset allocation could deliver you 50+ lakhs in 15 years, or get you close enough, with your investments in the completely safe PPF and relatively safe conservative instruments such as 5-Star rated MFs. The table above shows you why and how, it should get accomplished. Some Investing Basics Caveats Life is never so linear! You will need to monitor performance of the selected funds once in 6 months or so. PPF rates getting revised downwards is always on the cards. And we haven't considered inflation diminishing your returns say @6% on an average, per year. So to stay on target, you might like to top up your annual contributions by an additional 10K in PPF and 10K in the mutual funds of choice. Good luck!
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