How To Become a Crorepati in 5 to 20 years

Do you know how to become a crorepati in your lifetime ? Do you know what it will take to get you there ? If you don’t have clarity of how your journey will unfold, maybe a little insight on how important factors like time, rate of return and the amount of money you save periodically are in your journey should open your eyes.

You will also be pleasantly surprised to see that it is not impossible to know the secret on how to become a crorepati  as  one would imagine, as long as you are disciplined and not greedy.

Greed and the wish to make your money multiply quickly is a forte best mastered in Las Vegas. Out here, we recommend a healthy financial planning habit of long term investing with a focus on how to set your goals.

How to Become a Crorepati in 20 years

Congratulations ! You have time on your side. This is your biggest plus point.

• With a return of 15% per annum, the amount of  savings required each month  is Rs 6,678/-.
• With a return of 10% per annum, the amount of savings required each month is Rs 13,168/-.
• With a return of 5% per annum, the amount of savings required each month  is Rs 24,328/-.

As you can see from the above, the amount of money you need to put aside each month with a high rate of return (15%) is significantly less than in the scenario when the rate of return is low (5%).

How to Become a crorepati in 15 years

Pushed against the wall a wee bit ? It’s not that bad – you still have ample time on your side. Let us re-check the figures.

• With a return of 15% per annum, the amount of savings required each month is Rs 14,958/-.
• With a return of 10% per annum, the amount of savings required each month is Rs 24,127/-.
• With a return of 5% per annum, the amount of savings required each month is Rs 37,412/-.

With a difference of just 5 years of less savings, the amount required to be saved each month in the 15% rate of return scenario goes from Rs 6,678 to Rs 14,958 !! That is what time can do to your savings. Start saving early !

Nah, give it to me in 10 years

Time is running out on you. Though 10 years is not a long duration, it is not too short either. So your dream can still be achievable.

• With a return of 15% per annum, the amount of savings required each month is Rs 36,334/-.
• With a return of 10% per annum, the amount of savings required each month is Rs 48,817/-.
• With a return of 5% per annum, the amount of savings required each month is Rs 64,398/-.

Note what a difference of 10 years of less savings does to the amount required to be saved each month in the 15% rate of return scenario – it goes from Rs 6,678 to Rs 36,334 !!

5 years to a crore !

Time has run out on you ! It’s probably better to participate in Kaun Banega Crorepati (KBC) and try your luck. But looking at the figures won’t harm – the lines to your favourite game show are not open yet.

• With a return of 15% per annum, the amount of savings required each month is Rs 112,899/-.
• With a return of 10% per annum, the amount of savings required each month is Rs 129,137/-.
• With a return of 5% per annum, the amount of savings required each month is Rs 147,045/-.

As you can see, even with the highest rate of return, the amount required to be saved each month goes to a whooping Rs 112,899 if the time duration is considered the least (5 years).

Here is how the chart will look like. The Y axis denotes the amount to be saved each month.

Observations :

If you save and invest money for less number of years, the amount that you need to save each month to become a crorepati will always be a huge figure.

If you invest your money for a longer duration of time, the amount that you need to save each month to become a crorepati will be a relatively small figure.

This leads to the conclusion that time is of most significance. It is because of this reason, financial pundits tell you to start saving early so that the magic of compounding works it’s wonders and makes your money multiply over a long duration of time.

The only investment avenue that can fetch you 15% returns each year is the stock market. That implies that you should invest in equity for the long term to become a crorepati.

With a 5% rate of return, which debt can offer, you need to pump in a large amount of money each month to become a crorepati. Debt is not an ideal avenue to get rich. Equity is.

So the conclusions is simple – invest your money periodically in equity over a long duration of time to know how to become a crorepati.

How much time have you given to yourself to become a crorepati ?