How To Become A Millionaire In 10 Years

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By Sanjay Bhargava,*

‘Millionaire’ – now that’s a title which has an aspirational ring to it! While becoming a millionaire in dollar terms excites most of today’s youth; for millions, even becoming a millionaire in rupee terms is a distant dream.

Can this dream become a reality? With a well-defined plan and discipline, it’s quite possible! Unfortunately, most people believe that wealth creation requires a high income. Nothing can be further from the truth.

Equity mutual funds have generated stellar returns for investors who chose to have a long term perspective to their investments. At an expected 15% compounded growth, an investor needs to invest around Rs. 3,650 every month to have a realistic shot at achieving their goal of 10 lac rupees in 10 years.

If you save 20% of your income, a household with an earning of Rs. 18,000-20,000 per month should be able to do this. One actually doesn’t need to earn a lot!

But, what’s the probability that investments in Equity mutual funds will grow at 15% per annum over 10 years? If you believe that India will continue to grow; there is no reason why this growth will not get reflected in returns.

Easy buying & selling, easy tracking, entry with small amounts & liquidity make Equity mutual funds the perfect solution for the small investor. Moreover, tight regulations minimize the probability of fraud.

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Most aspirational Indians will have to set their sights much higher than being rupee millionaires. This is where a well-defined path comes into play. Imagine if the above strategy is employed for a 30 year old. He reaches his first goal of Rs. 10 lacs in 10 years. If he continues to do this for another 10 years, he reaches 50 lacs, and by the time he retires, he reaches 2.18 crores.

Now that is truly transformational! A household that earns 18,000 rupees a month, can hope to create wealth of over 2 crores through systematic investing. The outcome is likely to be much larger, as its fair to assume that income, and consequently saving will increase with time.

This example also brings to light the tremendous power of compounding. It must be noted, that time and not the absolute amount of money invested, is what matters most. A delay of just one year, will pull the wealth back from 2.18 crores to 1.89 crores.

In many cases, net worth gets destroyed if one doesn’t protect oneself, especially from health shocks, death or accidents. Just like investing right is important for wealth creation; insuring right is important for wealth protection.

Finally, the most important investment anyone can make towards becoming a millionaire is to invest in themselves. Upgrade your skills and learn about the investing world. What good is becoming a millionaire if you can’t preserve your wealth!

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If the above applies to you, get started. If you want to change the lives of people; spread the word – there’s a profitable business opportunity in doing good. We must together ensure that becoming a millionaire doesn’t remain just a dream for millions of aspiring Indians.

*He is the chairman and CEO of Bharosa Club, a SEBI registered investment advisory based in India.

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India Microfinance's editorial board consists of development practitioners and journalists from India and the world who determine it's editorial policy. You can know more about them on the Authors Page.

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Author: Editorial Team

India Microfinance's editorial board consists of development practitioners and journalists from India and the world who determine it's editorial policy. You can know more about them on the Authors Page.