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The 50/30/20 rule says you should allocate 50% of your income to essential expenses, 30% to discretionary spending, and 20% to savings.
Let’s see how much you need to earn per month if you want to save ₹1 crore in 10 years using this rule.
For calculation, we’ll assume that your savings are invested in an asset generating a 12% compounded annual return.
At a 12% annual return, you would need to invest ₹43,000/month to reach ₹1 crore in 10 years.
If you are saving 20%, you’ll need a monthly income of ₹215,000 to invest ₹43,000 per month.
Does this monthly salary seem too high?
Well, you could reach the ₹1 crore target even with a lower salary by increasing your savings.
For example, if you start investing 30% of your monthly income, you would need a monthly salary of ₹1,43,333 to reach ₹1 crore in 10 years.
Similarly, if you save 40%, the monthly income required would be just ₹1,07,500 to reach ₹1 crore in 10 years.
This shows that reaching a target of ₹1 crore is not impossible if one saves a significant part of their income over a decade.
Disclaimer: The following data is for informational purposes only and must not be considered investment advice from Upstox. Past performance doesn't predict future returns.
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