Video summary

How You Can Make ₹10 Crores By 40 Years Old in India ft. Kirttan Shah | #223 The Sanskar Show

Main summary

Key takeaways

Finance

Finance-Focused Subtitle Summary

Core Thesis / Recommendations

  • Wealth building depends mainly on:
    • How much you invest (investable corpus)
    • How long you invest (time horizon)
    • Return rate is important, but not fully controllable
  • For a typical young professional, career building (higher income / disposable income) is positioned as the prerequisite to achieving large goals—not merely starting a SIP immediately.
  • Risk management comes before investing, especially for health and life risks.
  • SIP matters, but under-investing is a major issue:
    • Starting small is fine, but later increase SIP to a “meaningful contribution” level
  • Avoid insurance-as-investment (e.g., ULIPs/endowment-like products). Use term insurance for risk coverage.

Scenario, Target Goals, and Math (Key Numbers)

Goal Framing (Example)

  • Example persona:
    • Age 25
    • Tier-1 India
    • Income ~ ₹25,000/month
  • Target by ~age 40:
    • ₹8.5 crore (“8 and a half crore”)

Return and Time Assumptions

  • Assumes 12% return
  • Time horizon:
    • 15 years = 180 months

SIP Required (for the stated goal)

  • Estimated SIP to reach ~₹8.0–₹8.5 crore:
    • about ₹1.78 lakh/month (~₹1,75,000–₹1,80,000 SIP)

Affordability Caution

  • Monthly SIP of ₹1.75 lakh implies income around ₹5 lakh/month.
  • Therefore, with ₹25,000/month income, reaching ₹8.5 crore via investing alone is described as “impossible” in that scenario.
  • Practical takeaway:
    • Build career/income first to enable a higher SIP later.

SIP Allocation “Thumb Rule”

  • If you have ₹100:
    • Expenses ≤ 30%
    • EMI ≤ 30–40%
    • Invest the remaining ~30%
  • Example logic:
    • Using ₹30,000 as investable amount and ~₹30,000 as expenses (roughly)
    • Assumptions:
      • 12% returns
      • 15 years
      • ~6% inflation
  • Outcome (as stated in the transcript):
    • Expenses at year 15 estimated to rise from ₹30,000 to ~₹72,000/month
    • Investing ₹30,000/month could accumulate about ₹142 lakh (~₹1.42 crore)
    • Financial independence timeline described as around the same ~180 months horizon (with garbled text in transcript)

Retirement Planning Framework (Goal-Based Investing)

  • Example:
    • Person age 30
    • Retirement age: 60
    • Spending needed until 85
  • Inflation: ~6%
  • Pre-retirement annual expense input: ₹5 lakh/year
  • Post-retirement:
    • Lifestyle assumed to drop drastically (transcript has some garbled numbers, but intent is clear)
    • Expenses mentioned as ~₹30 lakh/year by retirement (as stated)
  • Retirement duration: 60–85 = 25 years
  • Risk/return assumption for retirement corpus:
    • ~4% return (lower risk)
  • Estimated retirement corpus:
    • ~₹4.0–₹4.9 crore
    • Explicitly mentioned later as ₹4 crore 90 lakh
  • Monthly SIP example:
    • If needing ~₹4.9 crore by age 60:
      • invest about ₹16,000/month over 30 years (360 months)
  • Conclusion repeated:
    • Use goal calculators and set SIP according to your numbers.

Risk Management Framework (Step Order)

Order of operations (explicit):

  1. Health insurance
  2. Term insurance (life cover)
  3. Start/continue SIP investing

Additional emphasis:

  • Don’t rely on employer coverage—coverage may be insufficient or change when you switch jobs.

Disaster / caution statement

  • Claim: “99%/90% of India is one hospitalization away from bankruptcy.”
  • Point: early SIP amounts are often too small/illiquid compared to medical shocks.

Insurance-Specific Guidance and Disclosures

  • Strong caution: “Insurance sold as investment” is described as the “worst investing mistake.”
  • Example mentioned:
    • Over 21 years, a policy yielded roughly sub-5% to sub-6% return (via their back-calculation).
  • Recommended approach:
    • Term insurance only for risk management.
  • ULIP mechanics (why returns don’t equal “market returns on full premium”):
    • A ULIP allocates part of the premium to:
      • insurance charges
      • mortality charges
      • premium allocation
      • expenses
    • Therefore, the return you see is not comparable to investing the full premium in markets.
  • Transcript note:
    • “Disclaimer before I answer…” appears in a market-discussion context (practical caution that outlook depends on time).

Home Loan Payoff Strategy (Key Numbers + Recommendation)

Tax Regime Impact

  • They ask whether you are under old vs new tax regime.
  • Under the old regime, possible advantages:
    • Deductions for principal repaid (ATC)
    • Deductions for interest on home loan (subject to applicable sections)
  • EMI split example (illustrative):
    • EMI ₹80k
    • Interest ~ ₹60k
    • Principal ~ ₹20k
    • Principal repayment can qualify for ATC deductions.

Practical Conclusion (Recommendation)

  • Stated bluntly: “Never pay your home loan.”
  • Reasoning:
    • If you can invest in mutual funds yielding ~12%,
    • then prepayment “locks in” a return equal to the effective after-tax cost of the loan, estimated as only ~3–4% after tax benefits.
    • So paying off sacrifices the opportunity to earn ~12% instead of ~3–4%.

New Regime Notes

  • They state there are no similar tax advantages in the same way.
  • Transcript is messy, but they reference different treatment for the second house and deductions tied to rent received.

Market Outlook for 2026 (Macro + Cyclical Argument)

Don’t Extrapolate One-Year Performance

  • They caution against basing expectations solely on a single year’s returns.

Why India Underperformed Recently (Time-Bound Claims)

  • Claim: in the last 12–18 months, India delivered low single-digit returns.
  • Compared with:
    • other regions delivering roughly ~20% to 80% (generic range in transcript).

Proposed Reasons (Macro / Geopolitical Narrative)

  • Expensive valuations
  • War in 2025 involving India–Pakistan
  • Tariffs (Trump described as proposing 50% tariffs)
  • Business disruptions until clarity

Cyclical View

  • Capital markets are cyclical; if the last cycle was poor, the next cycle being better is “more probable.”

2026 “Triggers” Cited (Key Numbers)

  • Interest rates reduced by 125 bps (1.25%) in 2025
  • GST rate cuts
  • Taxes reduced:
    • transcript cites a threshold change from ₹7.75 lakh to ₹12–12.75 lakh
  • Link to economy:
    • Cheaper loans → more consumption
    • Higher disposable income → better demand
  • Earnings note:
    • By their recording time (Q3 results period):
      • out of ~500 listed companies, 456 had reported
      • PAT growth ~15% YoY

Equity Returns, Expected Return Model, and Asset Allocation

Expected Equity Return Framework

  • They argue expected equity return is roughly nominal GDP:
    • Example: GDP growth 6% + inflation 6% = nominal GDP ~12%
    • Therefore expected equity return ~12%
  • They also mention that last year India’s nominal GDP was “around 8 something” (garbled), which they use to explain low equity return expectations.

Higher Return via Small/Mid Caps (Volatility Tradeoff)

  • Illustration:
    • If Nifty falls 10%, microcaps could fall 30–40%
    • If Nifty gives 12%, microcaps could give ~16%
    • Presented as illustrative.

Why Fixed Income Exists

  • Different volatility tolerance → fixed income suits conservative investors.
  • Asset allocation concept:
    • Don’t put all money into one asset class.
  • Conservative example:
    • 80% fixed income + 20% equities
    • Claim: even if equities fall, overall portfolio may still not breach inflation-adjusted “loss” thresholds.
  • They also mention many people already have fixed income via:
    • EPF, NPS, PPF, etc.
    • So extra fixed income may be redundant.

Rebalancing / Behavioral Rationale

  • Even aggressive investors need some fixed income/hybrids for deployment during drawdowns.
  • They cite market drawdowns such as:
    • 2013, 2018, 2020 (COVID) and another cycle mention
  • Claim: markets can fall 20–40%.
  • Aggressive investors may keep ~20% in fixed income/hybrids to average during declines.

Commodities Section (Silver) and Cautions

Silver Valuation Framework

  • Commodities lack fundamental valuation like equities.
  • Price depends largely on demand and supply.
  • Rule-of-thumb mentioned:
    • Silver is often priced at about ~2% of gold.

Narrative for a Silver Rally

  • Drivers mentioned:
    • EV/batteries (silver used in batteries)
    • AI (data centers, semiconductors → chips → silver demand)
  • Warning:
    • narrative-driven justification can become crowded and unsustainable.

Key Price Levels and Sell-Off Logic

  • Silver referenced around ₹70,000–80,000 per kg
  • Later also mentioned:
    • “beyond point” around ₹4,20,000 per kg (garbled/unclear, but treated as a higher peak reference)
  • Logic:
    • Industries can’t buy profitably at that level, so rationalization occurs.
  • Investment-demand dynamics:
    • Rising silver draws retail/investors (“we too jump in”)
    • Leads to a “last leg,” then prices correct
    • “Weak hands” exit after roughly a ~20% fall

2026 Commodity Outlook

  • Geopolitics to decide next leg:
    • possible conflicts/tariff headlines involving Iran
    • references to Strait of Hormuz (transcript refers to it as “Strait of Worms”)
    • oil supply disruptions
    • potential “China banning silver exports” (supply-chain risk)
  • Explicit caution:
    • Commodities are highly cyclical
    • Non-professionals should avoid commodities; “quietly buy gold” instead of silver/copper/crude/platinum/PGMs.
  • Also cautions against complex commodity trades:
    • avoid setups involving derivatives/complex trades unless you are a professional investor.

Sector Picks for 2026 (No Tickers Named)

They mention “top four sectors” they like:

  • Banking / Financial Services (BFSI)
    • valuation described as around 2020 levels (price-to-book referenced)
  • Capital markets / AMC stocks
    • mentions “too much inflows” linked to SEBI regulations (transcript is late/garbled)
  • Fintech
    • AI adoption / operational cost reduction framing (AI “second leg”)
  • Textile and Chemicals
    • Transcript suggests textile and chemicals are both among the final set, though the “four picks” wording conflicts slightly.

They also note:

  • the fourth pick is “news driven.”

Portfolio Behavior / Personal Finance Notes (Spending + Credit Cards)

“Don’t Die Rich,” but Avoid Traps

  • Enjoy spending earlier in life.
  • Avoid overspending and EMI traps that strain cash flow.

Credit Card Tips

  • Use credit cards for business expenses (e.g., GST/regulatory fees, Google ads) to earn points without overspending.
  • Avoid carrying credit card interest:
    • risk cited as 35–40% interest.

Explicit Step-by-Step / Methodology Extracted

1) Wealth Math Framing (Goal-Based SIP)

  • Future corpus ≈ SIP × time, compounded at an assumed return (12% used).
  • Required SIP scales with:
    • the target corpus (e.g., ~₹8.5 crore by age 40 over 15 years).
  • If required SIP isn’t affordable:
    • increase active income/career,
    • then raise SIP.

2) Risk-First Investing Pipeline

  • Health insurance → Term insurance → SIP investing

3) SIP “Thumb Rule” Budgeting

  • Expenses ~30% of income
  • EMI ~30–40%
  • Invest remaining ~30%

4) Asset Allocation Framework

  • Conservative example: 80% fixed income + 20% equities
  • Aggressive investors still keep some fixed income for liquidity during drawdowns.
  • They also note many people already get fixed income via:
    • EPF, NPS, PPF

5) Expected Equity Returns Model

  • Expected equity return ≈ nominal GDP.
  • Optional higher returns via mid/small/micro caps with higher drawdowns.

6) Home Loan Payoff Decision Logic

  • Compare:
    • effective after-tax loan cost
    • vs mutual fund opportunity cost
  • Their conclusion:
    • if opportunity returns are higher, prepaying becomes irrational (avoid prepayment in their view).

7) Retirement Calculator Methodology

  • Input current expense → apply inflation to estimate retirement spending.
  • Choose retirement duration.
  • Assume conservative return:
    • ~4%
  • Compute required corpus and SIP (example cited: ₹16,000/month in their scenario).

Tickers / Instruments / Assets Mentioned

Equities / Indices

  • Nifty (index; no specific stock tickers)

Commodities

  • Gold
  • Silver (including pricing in ₹/kg terms; also referenced as MCX)
  • Mentions: copper, crude, platinum, PGMs

Fixed Income / Accounts / Vehicles

  • Mutual funds
  • EPF, NPS, PPF
  • FDs
  • LIC (criticized as investment-like)
  • ULIPs
  • Hybrid products

Derivatives (Not Recommended)

  • Futures and options (F&O) (advice: don’t do it)
  • ETFs: not mentioned in the transcript.

Key Disclaimers / Cautions Noted

  • They mention a “disclaimer” before answering the 2026 market question:
    • the thesis can change quickly
    • they don’t want anchoring on short-term returns
  • Practical cautions (non-legal, as emphasized in the transcript):
    • avoid insurance-as-investment
    • avoid commodities unless professional
    • avoid F&O

Presenters / Sources

  • Kirttan Shah (guest; investment professional / investment house perspective)
  • Host: The Sanskar Show (host name not clearly stated; referred to as “Kirtan” in dialogue)

Original video