While becoming a crorepati may seem well out of reach for most people, you could certainly give it your best shot by chalking out a long-term plan and taking small steps over the course of time to achieve your goal.
The ideal time to start would, of course, be as soon as you start earning. Usually, cash flows happen through two main sources. One is through incentives for human skills such as salary, professional income and profit, while the second is through income from investments. This can include interest income, income from shares and rentals from real estate. Ideally, you should look at retiring when the second source of income is enough to replace the first.
Saving and investing without a goal is not enough either. One needs a proper financial plan and then execute it without fail to fulfil their crorepati dream. If you also dream of retiring rich with crores saved up in your bank account, here is what you need to do:-
Earning-Spending Ratio: It is the first step towards reaching your crorepati goal. When you see you salary deposited in your bank account, the temptation to spend that money is natural and this why your first step is to resist that temptation. You need to make sure that your spending is always lesser than your earnings so that you are able to spend or invest a certain amount every month. This practice of spending less than earning should be consistent.
Savings: Savings are a compulsion because if you do not save anything, you will not have anything to invest which leads your wealth never growing. If you exhaust every penny that you earn, by the time you retire, you will not have anything in your bank account and this definitely isn’t what you need to become a crorepati. Save every month and invest that amount through a systematic investment plan (SIP). Based on your risk appetite you can choose whether to invest in equity funds or debt instruments. Do not miss SIPs because these investments will give you a great return over time.
Making your money work: Hard work is when you work diligently to earn money but, smart work is when you make your money work for you. The reason why a lot of entrepreneurs keep getting richer is that they let their money work for them. Never keep all your money in a savings account where it is stagnant and does not earn significant interest. Instead, invest some of that money into high return yielding products. Your invested money will earn more money for you.
Expenses: When your salary is hiked or when you get a bonus, one is tempted to spend the money to buy stuff which is a want rather than a necessity. If you want to become a crorepati, do not raise your standard of living everytime your pay get hiked or you receive a bonus. Instead, save that extra money or invest the extra money to earn interests. The more money you have invested for long-term, the higher will be the return because of compounding.
Plan: Goal-oriented saving/investment is what you need. If you invest your money based on your financial goals, it will be easier for you to manage your money efficiently. Choose your financial goal and investment instrument and make sure to remain consistent with your SIP in order to reach the goal as planned. It is easy to get sidetracked which is why it is extremely important that you stick to your financial plan. You must know that if you are not consistent with your SIP, you won’t be able to buy units at lower NAV, which could have increased your overall return.