Financial Planning: How to become Crorepati in 5 years?

You may have dreams and goals to achieve. If one of your goals is to become a Crorepati, then this article is for you. To achieve goals, you need to take action. You need to be clear and concise. You need to stick to the action plan.

Sit down and make a list of your goals. You may want to become a Crorepati in 5 years, buy a house in a good locality, buy a high-end car, educate your children abroad, take foreign trips and so on. It is important to make a new list each day.

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Financial Planning: How to become Crorepati in 5 years?

Over time you’ll see that not all goals on your list make it to subsequent lists. This is because priorities change. You might now want to settle for a decent mid-range car, instead of a high-end car. You may forget some dreams and abandon those which are unrealistic. After a few days, you’ll get a list of real goals.

Financial Goals:

Goals should be real, measurable and relevant. Goals should be achievable and time bound.

Becoming a Crorepati will only remain a goal if you don’t assign a timeline to it. How many Crores do you want to earn in how many years? Rs 100 Crores in 1 year or Rs 1 Crore in 5 years? Well, the first is unrealistic. The second is real and achievable.

Ambiguous and unrealistic goals like I want to become rich or I want to take a foreign trip or I want to earn half a Crore are not achievable; simply because they have no time frame and they are indefinite.

How to earn 1 Crore in 5 years?

You can only create wealth to the extent of earnings. Investment is not magic. You can’t invest 1 Rupee and expect it to grow to Rs 500 in a day or two. Keep in mind:

1. Increase income
2. Optimize expenses
3. Invest wisely

There’s nothing new and nothing unknown. But do you ever practice this?

1. Increase income:

You can increase savings in two ways:

• Cut down expenses
• Increase income

How long can you cut down expenses? How many expenses will you cut down? How about increasing your income? This makes sense. So, how to increase income?

Tap multiple sources of income. Secondary income may fluctuate, but it adds to overall income.

• You may rent out your vacant house.
• You construct an additional floor over your house and rent it.
• Work a few hours on the weekend.

SEE ALSO: Personal Loan vs Business Loan: Which Is Better?

2. Optimize expenses:

Stick to the basics. Don’t cut down regular expenses, rather optimize them. How to optimize expenses:

• Use credit cards with no annual maintenance charges or with minimal charges.
• Pay credit card dues on time.
• Don’t buy unnecessary things with credit cards.
• Don’t be an impulsive buyer.
• Shop online and use offers.
• Make use of discounts.
• Walk short distances. Stay fit and save fuel.
• Save on tickets by planning travel before time.

3. Invest wisely:

You can’t expect to make a Crore in 5 years without taking risks. Your SB account will not earn you great returns. You have to start taking higher risks. It doesn’t mean you jump mountains or invest all your savings in shares. That is foolishness. These are a few tips to grow your money:

• Mutual Funds are one of the most-effective tools to grow savings over the medium and long-term. You can invest as low as Rs 500 a month in mutual funds via SIPs. SIP stands for Systematic Investment Plans.
• Equity is the best investment option to earn good returns and accumulate wealth over the long-term. Newbie investors aspiring to test the waters of the stock markets, can start by investing in liquid mutual funds and then switch to a STP and transfer money to an equity fund.
• Diversify your portfolio by exploring large-cap, mid-cap and balanced mutual funds. You may also invest in sector based mutual funds. These are quite risky, but give high returns.
• Invest in stocks. Stocks are risky, but with high risks come high returns.
• Invest in PPF (has 15 year lock-in period). Currently, it gives 7.6% interest. Deposits are tax deductible, interest and proceeds on maturity are tax-free. You can invest a maximum of Rs 1.5 Lakhs a year and enjoy Section 80C benefits.
• Invest in ELSS Tax Saving Mutual funds (has 3 years lock-in period).
• Invest in NPS.
• Invest in Voluntary Provident Fund (VPF).
• Invest in tax-saver FDs.
• Don’t overspend on insurance.
• Don’t depend on insurance and mutual fund agents. Study how these work and make wise investments.

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