We all dream of many things in life. While some get fulfilled, others don’t because of a lack of money in hand. Some of us would have even dreamt of becoming a crorepati. Well, it’s not wrong to dream big but without a blueprint or a strategy achieving such dreams is next to impossible. For example, you are 25 years old and just got your first job. You have a dream to buy a flat costing 1 Crore. Now, to get to your 1st Crore isn’t a walk in the park. There has to be some strategy or a master plan to fulfil that dream.
The good news is it isn’t that difficult to get your 1st Crore in a few years. You must be bewildered hearing this for sure but fret not. We are going to talk about everything from how to save to the discipline of saving and investing and much more in this blog.
The foremost thing to look at is how much you earn monthly followed by your monthly expenditure, miscellaneous expenses, etc. This gives you a rough idea of how much you are saving monthly. That’s a good starting point but not enough to reach your dream because just your savings won’t take you anywhere. Keeping your money in your savings bank account doesn’t garner you good returns. You must invest in distinct investment avenues like stocks, mutual funds, gold, bonds, and others. Even if you do invest in these, you must be wondering will these saving and investing methods lead to 1 Crore and how soon?
To achieve anything in life, consistency and patience are very important, and this goes the same for saving and investing. If you are not saving properly, how can you invest consistently? To achieve big dreams like “becoming a crorepati”, you must be systematic with your investments and invest with a disciplined approach. All you have to do is put a certain amount of your total savings into different investment categories at regular intervals with a notion of holding for a long period of time, say 5 to 10 years as per your goal.
In simple words, the bigger the goal, the longer the investment horizon. Whether you are a salaried individual or a businessman or a freelancer, following these below aspects can help you to accumulate your savings to 1 Crore. We won’t say the returns are guaranteed or the future is predictable but if you follow some guidelines in the financial world, nothing can stop you from achieving this goal.
Below are some of the key steps that you must follow to get your dream of achieving 1 Crore fulfilled
Start Early: A lot of people enjoy their earnings by spending most of it in their early life instead of saving for the future. While it’s not at all wrong to enjoy your own hard-earned money, you have to be a bit practical until you achieve your financial cushion. In simple words, everyone has goals in their life, short-term or long-term. And depending on these goals, you need a sizable chunk of cash in your account.
As the saying goes “early to bed, early to rise makes a man healthy, wealthy and wise”, likewise, “starting early and investing early can result in good returns in the long run”.
One such way of starting early and starting small is through Mutual Fund SIPs. SIPs are a great way to invest with discipline as it automates your investments every month. You can start small and grow as your comfort and earnings increase. Just remember, the goal you are racing towards is becoming a crorepati. So don’t miss out on the chance of investing early in life and accumulating wealth over time with the power of compounding.
Start Small: There’s a quote that goes like “start small, think big”. This applies to investing as well. If you feel that investing in equity requires a lot of money or is risky, then the other way to invest in them is through mutual funds. This mode of investment creates discipline with respect to the investments if you are willing to go long-term. Through SIP, you can start small and invest regularly in equity by putting money in Equity Mutual Fund.
As far as returns go, they not only deliver inflation-beating returns but also yield more than some other instruments like fixed deposits, savings accounts, bonds, etc. Historically, the average annual return for equity mutual funds has been anywhere between 10 to 15% respectively. But remember, the number of years it takes to reach 1 Crore varies from person to person. So in the current case, the expected target amount is Rs 1 Crore.
If the expected returns from your investments are 15%, all you need to invest every month is Rs 15,000 for a period of 15 years to get your 1 Crore dream fulfilled. Amazing, isn’t it?
Discipline is The Key: Is it that hard to stay disciplined in the investing space?
The answer is “NO”. Well, here’s to why – If you are that person who pays their bills timely, saves every month properly, and puts a certain percentage of your savings into financial avenues regularly, then you clearly follow discipline here.
However, doing this requires a lot of dedication because at the end of the day it’s all about money. The only difference between a successful investor and an unsuccessful investor is that the former follows a disciplined investing routine whereas the latter doesn’t. The unsuccessful investors react to the market swings very quickly and impulsively. Successful investors, on the other hand, don’t react to every minor change or volatility in the market. They wait till the dust settles and then jump in to take their respective positions in the market.
Now, if you look at the bright side of disciplined investing, adding just 10% to your previous SIP amount annually for at least 10 years or more can bring about 40% to 50% growth in the returns.
The Power of Compounding: Finally, the last but the most important one is compounding.
Well, almost every investor must have heard about the “power of compounding”, but many of them are unaware of how this actually works. If you recall, you have learned the compound interest concept in your school days.
The interest adds to the new principle and carries the new value to the next period. The process keeps on repeating until you reach the specific year that you were computing for. Likewise, compounding in investing works the same. Now, let’s understand this compounding effect in financial terms.
As you know, investment is always a work in progress. There’s no end to it until you withdraw yourself from these things or squash your dream. The best way to accumulate 1 Crore is switching from short-term to long-term. The more time you hold your investment, the greater will be your returns on your investment. And compounding does the rest of the job for you by augmenting your investment money year-on-year.
A better way to put this is with a simple example.
Mr. Rohan goes for a Mutual Fund SIP and invests Rs 13,500 monthly at an assumed annual return of 10% for 20 years. Now, what would be the total value of Mr. Rohan’s portfolio after 20 years? Well, the total portfolio value at the end of 20 years will be Rs. 1.03 crore to be exact. Now what’s important to note here is that the total invested value over 20 years is just Rs. 32 Lakh, and the remaining Rs. 71 lakhs are the returns generated.
The reason for such high returns on the invested amount is the power of compounding we’ve been talking about. So, we’re sure by now you would have realized that reaching the magic figure of 1 Cr is actually not that difficult. What it requires is a disciplined investing approach and a suitable investment choice, like that of a Mutual Fund SIP.
If you too are also looking to start your investment journey, Mutual fund SIPs are a great way to begin. And Freecharge offers you Top rated Mutual funds from India’s biggest AMCs. You can start investing with as low as Rs 500. The Investing process is fast, Easy and 100% paperless. Don’t forget to check that out.