Building a Rs 100 crore corpus may sound ambitious, but it is achievable with long-term investing, rising savings and disciplined asset allocation, according to Radhika Gupta. Speaking at the ET Alpha Wealth Summit, the CEO and MD of Edelweiss MF, said investors often underestimate the power of compounding and overestimate the need for extraordinary returns.
She noted that Indian equities and nominal GDP have historically delivered returns in the 10-12% range over long periods, making such assumptions reasonable rather than exceptional.
At annual returns of 11-12%, money roughly doubles every six years, she said. An investor starting with a corpus of Rs 1 crore and remaining invested for about 25 years, while steadily adding fresh investments, could potentially build wealth running into several tens of crores, with Rs 100 crore becoming an achievable stretch target.
However, Gupta stressed that the biggest driver of wealth creation for younger investors is not their investment portfolio but their ability to increase income over time.
"For young investors, human capital is more important than financial capital," she said, urging investors to focus on career growth and systematically increase investments as earnings rise. She recommended increasing SIP contributions by around 10-12% annually after reviewing budgets and salary growth.
A key view of Gupta was that asset allocation matters far more than selecting individual funds. She spoke about the "BAT" framework for investing. The "B" represents beta, or returns generated by broad asset classes such as equities, fixed income and commodities. The "A" stands for alpha, or excess returns generated through skill and active decision-making. The "T" refers to tax efficiency and portfolio structure, including liquidity and after-tax returns.
She argued that in a world where market returns may moderate, investors should focus more on thoughtful asset allocation, alpha generation and tax efficiency rather than relying solely on rising markets.
Gupta also cautioned against the influence of social media on investment behaviour. She said online platforms often glorify rapid wealth creation and extreme outcomes, leading investors to develop unrealistically short time horizons.
