Being a millionaire is easy.
It is easy... to be a millionaire. And you may think that this is obviously another internet stunt and cheap publicity hugging exercise. And I must say, with some degree of certainty and greater conviction that miracle does not happen but we make it part of our life when we really want it! How? Well , by being humble. Yes . Being humble enough to acknowledge that we more often than not lack conviction to believe.. in our own ability to do things that would have seemed literally impossible even a couple of years ago. We all shall become millionaire eventually. But that is not the most important question. The most important question is how quickly can I become a millionaire? And what do I need to do in order to achieve it within a shorter duration?
As far as the people across the world are concerned , most of them are risk averse and hence stick to money markets or Government securities and bonds. That assures capital protection at its face value but erodes the wealth in a longer period of time, thanks to inflation and unplanned spending. To be in earnest, I have seen people around me blowing it away. People who love to gorge on their fast foods and coke and other quick serving delicacies are the ones that become aware of their financial responsibilities a little too late. When we earn money we divide it into smaller amounts and dedicate them to some specific purpose. It is equally important to understand that there will be contingencies required while we move on. Hence some part shall go for our consumption , some for contingency , some for short time investment and savings and some for longer term savings.
It is this longer period of savings that make our millionaires. Yes investment in businesses may make us millionaires within a shorter span of time but investment over a longer period of time shall definitely make us millionaires. Not only that, for a longer time investment you also need to invest a small amount of money every month for investment. Of course it is assumed over the years your income has to increase and hence your investments must also be aligned to inflation so as to protect your capital. So increase your investment every year , assuming that your inflation increases at the average annual rate of 6 %.
Let us assume your are gong to invest your money for a period of 25 years. Your annual investment shall grow at the rate of 14 percent over that period. Mutual funds usually show that amount of growth over a long period of time. You invest Rs. 2750 every month for the first year and the 2nd year follows with a 6% increase in your investments. let us see how much does your invested money grow up to. Let us assume you already have put 25000 rupees invested at the outset.
Interest
compounded yearly - added at the end of
each year)
Year
|
Year Deposits
|
Year Interest
|
Total Deposits
|
Total Interest
|
Balance
|
1
|
33,000.00
|
5,952.42
|
58,000.00
|
5,952.42
|
63,952.42
|
2
|
34,980.00
|
11,552.90
|
92,980.00
|
17,505.32
|
110,485.32
|
3
|
37,078.80
|
18,223.48
|
130,058.80
|
35,728.80
|
165,787.60
|
4
|
39,303.48
|
26,131.13
|
169,362.28
|
61,859.94
|
231,222.22
|
5
|
41,661.72
|
35,467.23
|
211,024.00
|
97,327.17
|
308,351.17
|
6
|
44,161.44
|
46,451.05
|
255,185.44
|
143,778.22
|
398,963.66
|
7
|
46,811.16
|
59,333.72
|
301,996.60
|
203,111.94
|
505,108.54
|
8
|
49,619.88
|
74,402.73
|
351,616.48
|
277,514.67
|
629,131.15
|
9
|
52,597.08
|
91,987.15
|
404,213.56
|
369,501.82
|
773,715.38
|
10
|
55,752.96
|
112,463.47
|
459,966.52
|
481,965.29
|
941,931.81
|
11
|
59,098.08
|
136,262.37
|
519,064.60
|
618,227.67
|
1,137,292.27
|
12
|
62,643.96
|
163,876.35
|
581,708.56
|
782,104.01
|
1,363,812.57
|
13
|
66,402.60
|
195,868.52
|
648,111.16
|
977,972.53
|
1,626,083.69
|
14
|
70,386.72
|
232,882.56
|
718,497.88
|
1,210,855.09
|
1,929,352.97
|
15
|
74,609.88
|
275,654.10
|
793,107.76
|
1,486,509.19
|
2,279,616.95
|
16
|
79,086.48
|
325,023.74
|
872,194.24
|
1,811,532.93
|
2,683,727.17
|
17
|
83,831.64
|
381,951.81
|
956,025.88
|
2,193,484.75
|
3,149,510.63
|
18
|
88,861.56
|
447,535.30
|
1,044,887.44
|
2,641,020.04
|
3,685,907.48
|
19
|
94,193.28
|
523,027.09
|
1,139,080.72
|
3,164,047.13
|
4,303,127.85
|
20
|
99,844.92
|
609,857.95
|
1,238,925.64
|
3,773,905.08
|
5,012,830.72
|
21
|
105,835.56
|
709,661.55
|
1,344,761.20
|
4,483,566.63
|
5,828,327.83
|
22
|
112,185.72
|
824,303.06
|
1,456,946.92
|
5,307,869.69
|
6,764,816.61
|
23
|
118,916.88
|
955,911.72
|
1,575,863.80
|
6,263,781.41
|
7,839,645.21
|
24
|
126,051.84
|
1,106,917.96
|
1,701,915.64
|
7,370,699.37
|
9,072,615.01
|
25
|
133,614.96
|
1,280,095.79
|
1,835,530.60
|
8,650,795.16
|
10,486,325.76
|
Regular Deposit Calculation
Base amount: 25,000.00
Interest Rate: 14%
Effective Annual Rate: 14%
Calculation period: 25 years
Yearly deposit inflation increase: 6%
Interest Rate: 14%
Effective Annual Rate: 14%
Calculation period: 25 years
Yearly deposit inflation increase: 6%
So by depositing a very modest amount of Rs. 2750, you can become a millionaire and a crorepati !
Of course if the annual return is assumed to be as low as 12.5% , you have to investment Rs 3500 to achieve the same.
(interest compounded yearly - added at the end of each year)
| Year | Year Deposits | Year Interest | Total Deposits | Total Interest | Balance |
| 1 | 42,000.00 | 5,917.59 | 67,000.00 | 5,917.59 | 72,917.59 |
| 2 | 44,520.00 | 12,074.84 | 111,520.00 | 17,992.43 | 129,512.43 |
| 3 | 47,191.20 | 19,326.81 | 158,711.20 | 37,319.24 | 196,030.44 |
| 4 | 50,022.72 | 27,829.83 | 208,733.92 | 65,149.07 | 273,882.99 |
| 5 | 53,024.04 | 37,760.95 | 261,757.96 | 102,910.02 | 364,667.98 |
| 6 | 56,205.48 | 49,320.61 | 317,963.44 | 152,230.64 | 470,194.08 |
| 7 | 59,577.84 | 62,735.60 | 377,541.28 | 214,966.24 | 592,507.52 |
| 8 | 63,152.52 | 78,262.47 | 440,693.80 | 293,228.71 | 733,922.51 |
| 9 | 66,941.64 | 96,191.28 | 507,635.44 | 389,419.98 | 897,055.42 |
| 10 | 70,958.16 | 116,849.95 | 578,593.60 | 506,269.94 | 1,084,863.54 |
| 11 | 75,215.64 | 140,609.05 | 653,809.24 | 646,878.98 | 1,300,688.22 |
| 12 | 79,728.60 | 167,887.20 | 733,537.84 | 814,766.18 | 1,548,304.02 |
| 13 | 84,512.28 | 199,157.24 | 818,050.12 | 1,013,923.43 | 1,831,973.55 |
| 14 | 89,583.00 | 234,953.09 | 907,633.12 | 1,248,876.52 | 2,156,509.64 |
| 15 | 94,958.04 | 275,877.49 | 1,002,591.16 | 1,524,754.00 | 2,527,345.16 |
| 16 | 100,655.52 | 322,610.75 | 1,103,246.68 | 1,847,364.76 | 2,950,611.44 |
| 17 | 106,694.88 | 375,920.60 | 1,209,941.56 | 2,223,285.35 | 3,433,226.91 |
| 18 | 113,096.52 | 436,673.18 | 1,323,038.08 | 2,659,958.53 | 3,982,996.61 |
| 19 | 119,882.28 | 505,845.58 | 1,442,920.36 | 3,165,804.11 | 4,608,724.47 |
| 20 | 127,075.20 | 584,539.82 | 1,569,995.56 | 3,750,343.93 | 5,320,339.49 |
| 21 | 134,699.76 | 673,998.65 | 1,704,695.32 | 4,424,342.58 | 6,129,037.90 |
| 22 | 142,781.76 | 775,623.33 | 1,847,477.08 | 5,199,965.91 | 7,047,442.99 |
| 23 | 151,348.68 | 890,993.58 | 1,998,825.76 | 6,090,959.49 | 8,089,785.25 |
| 24 | 160,429.56 | 1,021,890.15 | 2,159,255.32 | 7,112,849.65 | 9,272,104.97 |
| 25 | 170,055.36 | 1,170,320.14 | 2,329,310.68 | 8,283,169.79 | 10,612,480.47 |
Base amount: 25,000.00
Interest Rate: 12.5%
Effective Annual Rate: 12.5%
Calculation period: 25 years
Yearly deposit inflation increase: 6%
Now check the amount of money you spend for your personal expenses. That is the money you spend solely on yourself. you shall see that it can include couple of coffees , a magazine, a cab ride .. can be anything. Divide 2500 by 26 days (assuming you get a holiday on Sundays!) You see it comes to around 96 rupees, even less than a 100! So theoretically you can become a millionaire by saving at least 100 rupees over a period of time,. Now isn't that pretty cool?
Disclaimer: This site is for informational and entertainment purposes only, and the content herein should not be mistaken for professional financial advice. Please contact an independent financial professional or adviser for advice regarding your particular and specific situation.
