Do you wish to get rich the legal way and the most practical, smart way possible? Well, here are very essential realities not just simple words that will solve and answer your most desired dream of getting rich! These are: asset allocation, long term and compounding from a financial expert vocabulary.
Indeed, these are the very exact three words that can help you retire with Rs 40 a day. Let me show you exactly how do this work. Say for example, you can set aside Rs 40 every day for your retirement. Where do you get Rs 40 a day? Well, in many ways. Why not cut down on those cigarettes? Then, let’s see what could possibly happen with your mere 1 dollar! Hold your breath then.
Let’s also make some assumptions (do allow for the fact that all may not be valid). Let’s also suppose that these are valid for the next 30 years.
Instrument Yield (%pa)
| Investment | Approx % per year |
| PPF | 8 |
| Sensex | 18 |
| Equity | 21 |
Retirement Chart
| Money saved per day | Rs 40 | Rs 80 | Rs120 |
| Money saved per year | Rs 14,600 | Rs 29,200 | Rs 43,800 |
Money earned if invested over the next 30 years
| PPF | Rs 16,53,935 | Rs 33,07,870 | Rs 49,61,805 |
| Sensex | Rs 11,547,841 | Rs 23,095,681 | Rs 34,643,522 |
| Equity | Rs 21,099,200 | Rs 42,198,399 | Rs 63,297,599 |
Now you see what can happen to your $1! Nice chunk of change?! Now, isn’t it attractive dear readers? Doesn’t that make your retirement look so comfortable?
Of course, if you spend Rs 120 per day on cigarettes, you probably won’t live for 30 years!
Ah, now you are saying you don’t smoke? Maybe you’re a frequent restaurant-hopper or a frequent drinker, shopper, and many other? That would easily mean Rs 2,000 per week. Keep at it for 30 years and you would have said goodbye to Rs 15 crore. Think of the holidays you could have afforded with that kind of moolah! What a great retirement life indeed!
Let’s say for example you will save and cut your restaurant escapade or shopping galore: this will then be the computation:
Gastronome’s chart
| Money spent per day | Rs 750 | Rs 1,500 | Rs 2,000 |
| Money spent per year | Rs 39,000 | Rs 78,000 | Rs 104,000 |
Money earned if invested over the next 30 years
| PPF | Rs 44,18,045 | Rs 88,36,090 | Rs 11,781,454 |
| Sensex | Rs 30,846,972 | Rs 61,693,943 | Rs 82,258,591 |
| Equity | Rs 56,360,876 | Rs 112,721,752 | Rs 150,295,669 |
Don’t fit into the smoker or the gastronome’s category? But you have one weakness — you love shopping or outing maybe?. Say, you spend about Rs 10,000 per month on retail therapy.
Hmm. Over 30 years, a Rs 10,000 investment in an equity fund could fetch you Rs 17 crore. I won’t even go into what you can do with that kind of money! Here’s your computation then: Hold your breath!
| Money spent per day | Rs 3,500 | Rs 5,000 | Rs 10,000 |
| Money spent per year | Rs 42,000 | Rs 60,000 | Rs 120,000 |
Money earned if invested over the next 30 years:
| PPF | Rs 47,57,895 | Rs 67,96,993 | Rs 13,593,985 |
| Sensex | Rs 33,219,816 | Rs 47,456,879 | Rs 94,913,759 |
| Equity | Rs 60,696,328 | Rs 86,709,040 | Rs 173,418,080 |
Why do you think the otherwise smart, educated people fail to understand this? Allow me to tell you what I think.
Your life is a function of your habits, not simply common sense. It’s tough to change your habits. Consider this. Most smokers know the damage that 54,750 cigarettes can do to their health. But that ‘one’ cigarette never seems to matter. Ditto for that ‘just one’ cold drink of Coke or chocolate.
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In conclusion, most people don’t care about small numbers and wait for that big amount to come by for them to save. Funny thing is, if I tell you saving money are very simple and needs very simple methods to make large amounts of money, most people, including you would laugh at me. But it’s just so easy. Start small. Start simple. Save big! They need complicated tools such as day trading, brokerage accounts, futures and options, and the like.When you tell them that they can make a lot of money by just being disciplined they will just not believe it! Try it now or never!
