Updated: November 18, 2021 9:44 AM
Today you have so much flexibility and the right opportunities to safely and efficiently grow your wealth. But you have to act, starting today!
It was my summer school holiday. I was lazily reading comic books in the corridor. My grandfather called me to the balcony and asked me to sit next to him. He took out a magnifying glass, fixed its position, and started converging the sun rays on the paper until it started to burn.
It was one of the best science experiments I’d seen as a little kid. Soon he handed me the glass, “Now you try it, Videsh.” I took the glass and started slowly moving it all over the paper, but nothing happened.
“No dear, you have to focus the rays of the sun into a beam at the right angle, hold the glass at one point and keep patience till the beam becomes so strong that it erupts into a small flame, and soon the flame will turn into a fire,” he said.
Why I’m telling you all this is because this simple lesson holds the secret to harnessing the mightiest force ever to amass wealth and financial freedom – buy safer, profitable investment, and keep it for the long term till it starts compounding.
The Secret To Growing Rs 10 Lakh To Rs 100 Cr By The Time You Retire
Just have a look at this graph. If you invest Rs 1 lakh at the age of 20 and it compounds at the rate of 20%, by the time you turn 65 years, your investment will grow to Rs 99 crore – that’s the magic of compounding.
Now let’s be more conservative. Say, you invest Rs 1 lakh at the age of 30, and it compounds at 15%, so by the time you turn 60, your investment would have multiplied to crores. In fact, you do not have to be a financial expert to make this happen! Literally, anyone can use the power of compounding to one’s advantage and attain complete financial independence.
In fact, at Archers Wealth, we educate people to start sooner and then help with consistently better compounding profits because even a tiny difference creates a difference of multi-millions in the long term.
With The Right Investment Strategies, You Can Speed Up the Process And Retire Much Sooner And More Wealthier
Now, imagine, instead of getting a profit of 5-8% on your real estate asset / FD investments, what will happen if you allocate your investment in high-quality stocks, mutual funds and SIPs (systematic investment plan)?
You’ll consistently boost compounding profit to 20%, 25%, 30% or even more (as I have been helping my clients for over a decade now). You will safely and predictably reach your financial freedom goal in half the time or even less.
Ready for some mind-boggling example?
Let’s say your father had invested Rs 1 lakh in Eicher Motors in 2001. Do you know how much its worth is today? It has skyrocketed to Rs 1,45,19,274.
Or let’s say your father invested Rs 10000 in Wipro shares in 1980. Can you guess its value today? A whopping Rs 801 cr with just a 41% compound annual growth rate.
I know these are like generation-alerting opportunities. However, in the last 10 years, we have suggested 100 plus companies that have been consistently producing 15% to even 50% profits.
What Makes the Rich Richer and The Poor Poorer?
There’s a reason, Albert Einstein said. “People who understand the Magic of Compounding earn it, Those who don’t, pay it.”
And there are five main reasons why most people pay it, and that’s also why the poor get poorer.
1. Bad Financial Habits – People work hard to earn, steal time from their family and friends. But the sad truth is, they spend most of their hard-earned income on buying liabilities that depreciate over time instead of assets that appreciate like Eicher Motors and Wipro stocks etc. Worst is, they buy things on credit cards and repay at 35 interest rates, which is quite literally a tragedy.
2. Lottery Approach or Lack of Patience – Most people want to build a fortune overnight out of thin air. But the process of compounding starts with a minimal, negligible change – there’s no immediate result. So, people think, why bother? And they stop investing and start withdrawing it.
3. Poor Investment Strategy – Because of the lack of knowledge, people settle for 5% or max 10% returns when they can get 18% or 25% or even more boost on return in profits year on year. And even a slight difference of 2% or 5% can create a difference of multicores in the long term.
4. Delaying it for tomorrow to make a big investment altogether – When I ask people, have you started investing, many of them say, “Let me save some big amount and then I will invest”. Listen, you won’t need lakhs to start today. In fact, under top-up SIP, you can start with Rs 5000 monthly (or even less), and as your income grows, you can add Rs 2000 or Rs 5000 every 6 months depending upon your financial planning.
5. Neglecting expert’s help: If you have a broken tap, you call a plumber. If you have a broken tooth you go to the dentist. However when it comes to planning and investing finances, most people avoid taking an expert’s help even though your lifestyle, wealth, retirement income and ability to compound and multiply your wealth depend on how expertly you use your investment. One of the reasons is your hesitation and feeling a lack of transparency in so many experts.
This is the reason when we educate the clients, we always back it up with over a decade of our track record and time tested profit-making systems and processes producing consistent compounding results.
Today you have so much flexibility and the right opportunities to safely and efficiently grow your wealth. But you have to act, starting today!
And do you know why most people never act and stay stuck in bad financial situations? Because they do not believe they will ever be rich. And if you ever feel the same, it’s not your fault. It is because of your upbringing and society.
You deserve to be rich. You deserve to enjoy the finest things of life. Give yourself permission to invest and think like a rich person, and you’ll start to see the difference.
It’s time to erupt your wealth flame and turn it into an automatic, ever-growing and ever-multiplying fire of wealth
Consider this: Recently, stock markets hit a record high, i.e. Sensex 60109, Nifty 17,810.
Twenty years ago, NIFTY was at the 900 mark, and now it has zoomed to the mark 17910, which means a staggering 1755% appreciation. That’s the astonishing power of compounding.
Over the last 20 years, the stock market has grown at a CAGR of 17.1 %, giving the greatest return than any asset class in India. Fabulous, isn’t it?
So, start today and allow yourself to be a smart, long-term investor, and you’ll start to make the unbelievable magic of compounding a reality.
You’ll be astonished to see when your investment starts to make profits, and those profits produce profits, and those profits produce more, triggering an unstoppable chain reaction.
And as this happens, you can’t help but feel a sense of pride, happiness, confidence and security about your investment, your future income and your family’s life. Isn’t it a wonderful feeling?
Warren Buffett, one of the wealthiest person in the world known for his exemplary investing gut, has an average compounding growth rate of 21% p.a. (per annum) in his portfolio.
(By Videsh K Totaare, MD & CEO, Archers Wealth Management Pvt Ltd)
Disclaimer: These are the author’s personal views. Investors are advised to consult their financial planner before making any investment.