How to become rich

How to Become Rich With Less Income

Becoming rich is a dream. Is it your dream too?

Becoming rich and building wealth is possible even if you earn less.  Earning more is not necessary to become Rich. Saving regularly is the key.

Rs. 1,000/- invested monthly for 21 years at a 12% rate of return, becomes Rs. 11.40 lakh

Rs. 5,000/- invested monthly for 21 years at a 15% rate of return becomes Rs. 88.60 lakh. The total amount invested is Rs. 12.60 lakh and interest earned is Rs. 76.03 lakh,

Make it 25 years, i.e. only increase by 4 years and the maturity amount becomes Rs. 1.60 crs.

This is the power of regular investment and compound interest. The prominent scientist Albert Einstein was also astonished by the power of compound interest.

“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.” Albert Einstein

Here are the few simple tips for everyone to build wealth and become rich.

  1. Invest Regularly

Regular investment is the key to become rich. A small amount invested regularly keeps the investment growing.

A regular investment offers the benefit of compounding interest over the period. As we have seen in the example above, Rs. 5000/- monthly investment for 21 years becomes Rs. 88.60 lakh and in 25 years it becomes Rs.1.60 crs.

“Do not save what is left after spending but spend what is left after saving.” Warren Buffet

This is how money grows.  Discipline is the name of the game. This is why life insurance plays an important role in building wealth.

Life insurance policies are usually long-term in nature. The purpose of ULIPs plans is to build wealth and protect the insured.

You are tied up to invest for a long tenure. This compulsion to invest regularly for a long time is the blessing in disguise in your wealth creation journey.

When the question is of longer tenure, you are not as committed to any other investments as you are committed to the life insurance policies.

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  1. Invest Safe

Regular investment is the key but safe investment keeps the key in working conditions.

Invest but invest in safe instruments. Avoid risky investments like stocks and unsecured investments like company fixed deposits.

It’s tempting to get lured by high-interest rates. Do not dilute your safety condition, come what may.

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  1. Spend Wisely

Spending wisely will make you save more.  In the example above, Rs. 1,000/- saved every month by not spending on unwanted things, can become Rs. 11.40 lakh in 21 years.

Evaluate your spending options. Don’t spend on unwanted things and be a smart spender on the thing you need to spend on.

If you earn less, spend lesser and save more. You are on your way to becoming rich.

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  1. Don’t Borrow

Borrowing is costly. It is a big leakage hole on the path to becoming rich.  The interest you pay on the borrowed amount is an expense. This is an extra expense you incur for enjoying things you can’t afford with your current income.

You can save the interest you pay. This small saving can result in a big corpus after a few years.

Unless you are buying a home which is an appreciating asset, don’t borrow.

“Borrowing and spending is not the way to prosperity.” Paul Ryan

Think twice before you decide to borrow.

Keep these 4 wisdom in your mind and practice it with discipline. It is only a matter of time when you will be rich. You will not have to work for the money but your money will work for you.

To conclude in one line; Save more, invest wisely, spend smartly, and borrow cautiously.

You may like to read: Do You Know You are Wealthy Without Your Knowledge

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