Discover 2 FACTS that will increase your wealth SIGNIFICANTLY

There are facts and then there are opinions. “Sun rises in the east” is a fact i.e. it does not matter if you were born in India or the US or if you were born in the 20th or the 21st century the fact will not change. Similarly, there are 2 key facts which can make you wealthier if you just apply them.

Fact #1 Investment generates wealth:

Two individuals may be staying in the same city earning the same income and saving the same amount every year but the one, who invests, will end up wealthier always.

The key is in the way you define an investment. Putting your savings in a fixed deposit giving a return of 8.5% would not be an investment for the simple reason that after taxes, it may not even beat inflation which over last 40 years in India has averaged 7.75%. For me, an investment is anything that gives a post-tax return that is higher than the inflation rate by at least 6%. That figure may vary from person to person but understanding the nuance is very important.

If you invested a lakh every year in a portfolio giving 14% returns vs. putting the amount in a Fixed Deposit account giving an interest of 8.5%, the difference in your net worth would be more than a crore after 25 years.

Fact #2 Compounding builds wealth if you start EARLY

Compounding is a concept in which when money is left to earn interest long-term, can grow exponentially because interest earns interest.

Suppose, you decide to put your money every year in a Public Provident Fund (PPF) account earning an interest of 8.5% till the age of 54 your planned retirement age. A good call however, the earlier you execute that decision the better for you.

If you start putting a lakh in to the account every year at the age of 24, the returns are approximately 4X by the time you retire. But if you delay by even 5 years and start at 29, the returns are reduced to 3X. In absolute terms the difference is approximately 40 Lakhs and you can earn that extra amount without any risk just by starting 5 years earlier.

In conclusion, the two principles of investment and compounding are simple however very powerful so, all you need to do is put them into ACTION and see your wealth explode.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>