Kaise Banoge Crorepati? – Want to Know How?

More than Kaun Banega Crorepati?, its time now to have a look at Kaise banoge crorepati?. Clearly every individual is not a Dhirubhai Ambani or a Siddharth Mallya who has either the entrepreneurial vision or an inherited business empire. It doesn’t really take a lot of effort to fulfill this dream of yours. This piece will show you that.

The three to-do’s of this not-so-tedious task would be

  1. Start early
  2. Be disciplined in your investments
  3. Know the power of Compounding

The chart below gives you a better picture of how the above three mantra’s can be conveniently implemented.

Your Current Age Years left to save*** Amount Required per month

8%* 10%* 12%*
25 30 6,709.79 INR 2,861.26 INR 2,861.26 INR
30 25 10,514.96 INR 5,322.41 INR 5,322.41 INR
35 20 16,977.34 INR 10,108.61 INR 10,108.61 INR
40 15 28,898.54 INR 20,016.81 INR 20,016.81 INR
45 10 54,660.93 INR 43,470.95 INR 43,470.95 INR

* Interest Rates are without considering Inflation

*** Assuming retirement age is 55years


If you’re 30 years old currently, on a basic rate of return of 8%p.a. compounded monthly, you would need to save about Rs.10514.96 per month. However if your asset allocation in your portfolio is strong enough, over a span of 25 years, on an average if you could receive a 12% pa return, then would just need to save Rs.5322 per month. So sooner the better! Clearly, the way you allocate your assets will help you understand how much do you really need to save!

Ultimately its WE ourselves individually who need to be disciplined in our savings and its respective asset allocations rather than having a fancy investment plan or a disciplined product. Saving every month or quarterly in equal sums rather than lump sum amounts at anytime during the tenure will incur discipline in savings and avoid ad-hoc savings.

However, if one wants to understand what goes behind this, then here it goes… “The Power of Compounding” With simple interest, you earn interest only on the principal (that is, the amount you initially invested); with compounding, you earn interest on the principal and additionally earn interest on the interest. In other words, it’s a way of making your money work harder for you, and is perhaps the most powerful tool that an average investor can use to plan for many of life’s financial goals, including retirement. Yes! So Benjamin Franklin was right when he said it was the Eighth wonder of the world!

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