Investments
Learn the simple way to build wealth & become a Crorepati
PhonePe Team|2 min read|27 October, 2020
Everyone dreams of becoming a Crorepati but not many know the path to get there. While there are certainly no short-cuts, it is possible if you have the patience and discipline to invest regularly.
The magic mantra is to invest patiently in small amounts and let compound interest take over.
What is compound interest?
It’s really simple. Imagine you invest Rs.100 at an 8% per annum interest, you will receive 8 rupees at the end of the year. If you reinvest the Rs.108 again for another year at the same 8% interest rate, you will receive Rs 8.64. The extra 64 paise of interest is because you earned interest on interest — hence compound interest.
The longer you stay invested, the more ‘compound interest’ you earn and over long periods of time, it snowballs into bigger amounts — much bigger than the original sum of money invested.
How much do you need to save and how do you get started?
If you have a 30 year investment plan (by starting early), you will need only Rs.1300 per month with the monthly contribution increasing by 10% every year.
You can also choose to invest more if you want to reach the Crorepati status faster than 30 years.
The table below shows the monthly investment amount you would need to start your crorepati journey.
So, if you expect 10% annual return from your investments, you may need to start with Rs.3,200 per month to achieve a corpus of 1 crore in 25 years. Likewise, if you expect 12% return on investment and want to achieve this milestone in 20 years, you may have to start with Rs.5,400 per month.
Ready to get started on your Crorepati journey?
Here’s what you should remember before you start:
Choose the right investment products: You must start with the right combination of products across asset classes such as equity and debt, based on your risk comfort. And if this seems difficult, you can opt for one of our investment solutions that suits your risk comfort.
Decide the monthly investment amount: Based on the investment product or combination of products that you choose (Aggressive, Moderate, Conservative) and the number of years you plan to invest, you can decide your initial monthly investment.
Follow a disciplined approach: You need to follow a disciplined approach of (a) investing every month, (b) increasing your investment by 10% each year.
Have patience: Most importantly, you must hold on to your investments irrespective of short-term ups and downs.
Don’t wait! Work on your personal investment plan and get started on your journey to becoming a Crorepati today.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully before investing.
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