For countless Indian investors, the dream of accumulating a corpus of ₹1 crore stands as a defining financial milestone. Yet, the path to this goal is often shrouded in confusion regarding portfolio construction, asset allocation, and the impact of taxes. In a detailed discussion, Archit Doshi, Fund Manager for Non-Discretionary Solutions at Prabhudas Lilladher (PL) AMC, demystifies this journey, providing a clear, actionable blueprint for the common investor.
The Ideal Portfolio Mix: A Three-Layered Strategy for Growth and Safety
Building significant wealth requires a balance between ambition and prudence. According to Doshi, an ideal portfolio targeting ₹1 crore in a 10-year horizon should be constructed with three strategic components working in tandem.
The foundation, constituting 75% of the portfolio, should be in diversified equity mutual funds. This allocation is not passive; it requires a deliberate tilt towards small-cap and mid-cap companies. Over a decade, these smaller companies are poised to grow faster, capitalizing on India's economic expansion. Diversification across various sectors is crucial to avoid overexposure to any single industry's volatility.
The stability layer, making up 10% of the portfolio, should be allocated to debt and debt-like instruments. This portion acts as a critical safety net for emergency liquidity needs, such as medical expenses or sudden job transitions. Its primary role is to prevent panic selling during market downturns, ensuring the core equity investment remains undisturbed and disciplined.
The final layer of 15% is dedicated to gold. Gold's unique characteristic is its low correlation with the stock market; it often moves independently. Historically, it has offered superior protection against inflation compared to debt instruments. Including gold significantly reduces the overall volatility and risk of the portfolio, making the wealth-building journey smoother.
This calibrated 75-10-15 mix is designed to be aggressive enough for substantial growth while providing sufficient stability for investor peace of mind over the long term.
Navigating Taxes and Calculating the Required Investment
Taxes can erode a significant portion of your returns, but a smart asset structure can mitigate their impact. Doshi explains the critical tax angles for each asset class.
Equity mutual funds held for over one year attract a long-term capital gains (LTCG) tax of approximately 14.95% (including surcharge and cess). Selling within a year incurs a much higher tax rate of roughly 23.92%. For a 10-year horizon, most equity gains will benefit from the lower LTCG rate.
Pure debt funds are taxed at the investor's maximum marginal income tax rate, regardless of the holding period. Here, hybrid funds like equity-savings or arbitrage funds can be advantageous. Though they may have a debt-like return profile, they qualify for the lower equity tax rate of about 14.95% if held for over two years, enhancing post-tax returns.
Gold held for more than 12 months is also eligible for the 14.95% LTCG tax rate. Therefore, the non-equity bucket is smartly split: pure debt for immediate liquidity and hybrids for tax efficiency, with gold serving as a diversifier and inflation hedge.
The Monthly SIP Discipline: Letting Compounding Do the Heavy Lifting
The crucial question for every investor is: how much must I invest monthly? Doshi provides a clear answer.
To reach the ₹1 crore target in 10 years, a monthly Systematic Investment Plan (SIP) of approximately ₹50,000 is required. Over 120 months, this amounts to ₹60 lakhs of personal capital invested. The magic of compounding generates the remaining ₹40 lakhs, assuming the portfolio achieves a post-tax return of around 10%.
The real power of an SIP lies in its mechanical discipline, which removes emotion and market-timing risk. Whether markets crash or rally, the consistent monthly investment of ₹50,000 buys units at varying prices, averaging out the cost over time and capturing gains across market cycles.
The expert's message is clear: wealth is built not through speculation, but through time, consistency, and a disciplined strategy. Starting today with a committed SIP in a well-structured portfolio can set investors firmly on the path to their crorepati goal.
