Becoming "CROREPATI" cann't be easier than this....

Becoming ,’ Crorepati’ is a dream which every Indian has. But the critical question is how to do that. While there are many ways to do become a crorepati, the one which strikes the mind is to participate in the popular television channel,’ Kaun Banega Crorepati’ and win a crore in the game show. But there comes the catch .It is not only difficult to get selected for the show, it is even more daunting task to win a crore in the program. But hang on! You need not get tensed! There is an easy way out and it comes from a common sense approach to investment. An investor you need to do two things to achieve the target. One is to start early and second is to invest with a long time horizon.

If you are 20 year old, all you need is to put Rs.28.50 in your piggy bank daily, withdraw it after a month and invest the same in a mutual fund. There is no need even to invest money daily. This can be your way to be a crorepati. While there is no element of guaranteed return here, power of compounding can work in favour of investor and help him achieve his target.

Let us understand it with an example and a set of assumptions. Assumptions are as follows:

• Mr. X is 20 years old
• He accumulates Rs. 28.50 every day for a month for 40 years in a piggy bank
• After the end of month he withdraws money from piggy bank and invests it through SIP in a well diversified mutual fund
• Mutual fund gives a return of 12% p.a., compounded monthly
• Options are available to invest saved amount or else he can change the amount of investment to meet requirements of SIP amount.

If Mr. X continues this process for 40 years, he will become a crorepati if all the assumptions mentioned hold good. Rs. 28.5 invested daily for a period of 40 years grows into a crore because of magic of power of compounding. This opportunity is available to even older people. However, they have to forgo some other consumption though in small quantity only. As a 30 years old person, you need to save Rs. 95 daily. As the age progresses, the savings required increases naturally. The chart below shows that:

Age	Time Frame	Daily Savings(In Rupees)	Expected Rate of Return
20	40 Years	28.5	12% p.a. (compounded)
30	30 Years	95	12% p.a. (compounded)
40	20 Years	340	12% p.a. (compounded)

So, what do you need to achieve the target of Rs. 1 crore as a twenty year old? No gigantic effort. Just skip a cup of tea and two cigarettes daily. What if, you are already a non-smoker and even don’t drink it. Find out an easy way of thriftiness, without changing your life style substantially. Thriftiness needs to be little more for a 30 year old person and much more for a 40 year old person. So why not start early as well.