Sounds surreal? The first question that comes to your mind after reading the title would be; Is this possible? The answer is Yes, with proper planning and consistent investing, you can become a crorepati in just 10 years.
This requires time and energy. You need to carefully plan out your finances. In order to do so, here are certain points you cannot neglect:
Consider Your Finances: Take a look at your monthly income and monthly expenditure. Check if you are spending more than your income. If you have availed loans or credit cards, focus on paying them off first.
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How To Be a Crorepati in 10 Years?
Plan your expenses: Cut out unwanted expenses and increase your savings. The amount you opt to save can be further divided for investment purposes. You can invest any amount. It is not necessary that you invest big amounts. You can begin by investing small amounts as well. Returns as low as 1% on your earnings can lead to wealth creation.
- Choose a certified financial advisor: Sometimes, people are reluctant to take financial advice from professionals. This is because we don't spend on things we believe we can do ourselves. And when it comes to investing, we are overconfident that nobody knows our financial environment better than us. But this is not true. Financial advisors are professionally qualified and can manage our investments and finances. They have in-depth knowledge on the same. Advantages of availing services from a financial advisor are:
- They save your time: On a regular working day, you are busy from morning until you get back home. And the little free time you get, you would spend with family for leisure activities and so on. Investing requires time. You must learn and gain information before investing. Opting for a professional advisor saves time.
- They keep you on track: There are many aspects of finance that may not cross your mind. This includes your retirement plan, investment portfolio based on age, financial security for your family and much more. A financial advisor will help you plan out all these situations easily.
- They are financially alert: Financial Advisors are always well aware of the happenings in business and economics. Stock market fluctuations, interest on loans, return on investment products, inflation rates, laws and rules regarding these and so on. This means they provide us with well-informed advice inculcating every feature of the environment.
- They help you with more than investing: Besides investment planning, financial adviser’s advice on tax planning schemes, spending strategies, long term planning and much more based on your demands.
- List the investment options: There are a number of investment options available in the market. Everyone has different financial goals. Based on your goals, you can opt for one, two or a combination of investment options. Try to diversify your portfolio. This will spread the risk involved and balance the gains. Make sure you list them out. Ask your financial advisor to give a detailed report on returns on these investments.
- Set a targeted plan: You must choose a plan to accomplish your targets. Investment means investing a portion of your income to receive additional returns. This can be done in two ways. Systematic investment plan (SIP) or through a lump sum. This allows you to make periodic contributions regularly until your target is achieved.
See Also: Best Investment Plans for Millennials in 2020
People with lower income opt for SIPs. This encourages disciplined investing and can be chosen by anyone. Paying off a lump sum amount means you need ready cash. You do not have to regularly keep aside a portion of your earnings for investments.
- Use investment planning calculator: Calculate the return on investment using an investment planning calculator. A calculator uses the following formula:
Where FV is the future value. Future value is nothing but the value of an investment on a future date based on an assumed rate of growth. This is important for investors.
- PV is the present value. It is the current value of a future sum of money at a specified rate of interest.
- I am the interest rate and n is the period of investing in terms of years.
- If these figures and formulas seem like rocket science, don't worry. There are online investment calculators that help you calculate the future return on investments. Using these calculators you can get a clear picture on the future growth of your current assets.
- Be a disciplined investor: Setting a goal and choosing a strategy to achieve this goal are the uncomplicated parts of investing. The real challenge is sticking to this strategy. A disciplined investor is consistent. He/she must not be affected by market fluctuations, family needs, career status, economic changes and more. You must have a sound risk management strategy in place to deal with real-life situations.
- In order to be a disciplined investor, you must take care of the following:
- Start investing early: Wealth creators invest regularly each month or year. They do not invest in a particular year and disappear in the following years. They invest repeatedly and early, watching their wealth grow.
- Keep emotions away: Make sure nothing moves you when it comes to investing. Neither happiness nor fear. Keep emotions and investments separate.
- Understand the cyclic nature of the market: When you have a lot of money in the stock market, a fall in market prices can disappoint. However, successful investors understand this. The market has a cyclic nature and a fall will be followed by a rise and vice versa.
- Diversified portfolio: Diversifying the portfolio means investing in different sets of assets and funds. This will reduce the risk involved and you enjoy returns during market fluctuations.
See Also: A Five-Minute Guide to the Systematic Investment Plan
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