Saving is the first step of investing and it is the back bone of all investors. You can't invest if you don't have money. There is no free meal in this world. It is very important to understand that you can't make something out of nothing. People talk about Credits and Margins, I just laugh at them. It is simply not going to work and you must do it in the hard way. That is cutting corners and learning to live below your mean.
After our wedding, we had some cash left in hand. Yeah.. She organized an amazing wedding(definitely worth a separate post). We banked that money and since then we have been opening one FD a month. We started with 1x One month FD, then 3x Three month FD and so on... Now we are in to 12x One year FD's and interest income is already close to her monthly expenses. That is the sweet retirement she is looking at. This armada of FD's is our primary safety net. Even if we loose our jobs, we don't have to sell our holdings to survive.
Above statement says how important it is to start investing early. It is a exponential process and any delay will get exaggerated in the long run. Some want to be billionaires over night and some have stupid excuses against starting. To start you don't need to be big, but you have to be consistent. This is a growth forecast if you save Rs.1000/= per month @ 12% rate for 40 years.
Points to note:
1)In just 7 years, interest income will be higher than your annual investment.
2)In 40 years your will have saved over 10 Million, but if you delayed your start by 5 years you will have only 5 Million.
If you think 40 years is a lot of time, Here are some ways to boost your growth.
・ If you manage to find 15% rate it will take only 34 years to achieve 10M mark
・ If you start with a 100,000 and contribute 24,000 per year, It will take only 27 years
・ If you increase your monthly contribution to 5,000 it will take 22 years
・ If you manage to save 10,000 a month it is just 18 years
A Life Lesson
As I have said before, most professionals I know live from pay check to pay check. I was no different about 6 years ago. My wife is just starting her professional carrier as a charted accountant. 6 years ago I received the same paycheck as her and my annual saving was a minus figure. Just one year after my graduation I had about 5 Credit cards and all were fully utilized. That is how I ended up with a minus figure. Now looking back and comparing what I did in those days, It is amazing to see how my wife manage her day-today expenses with half of her salary. She don't use any credit cards, she cook at home and we don't have a vehicle yet.
After our wedding, we had some cash left in hand. Yeah.. She organized an amazing wedding(definitely worth a separate post). We banked that money and since then we have been opening one FD a month. We started with 1x One month FD, then 3x Three month FD and so on... Now we are in to 12x One year FD's and interest income is already close to her monthly expenses. That is the sweet retirement she is looking at. This armada of FD's is our primary safety net. Even if we loose our jobs, we don't have to sell our holdings to survive.
Importance of Starting Early
"The best time to start investing is yesterday and second best time is today"
Above statement says how important it is to start investing early. It is a exponential process and any delay will get exaggerated in the long run. Some want to be billionaires over night and some have stupid excuses against starting. To start you don't need to be big, but you have to be consistent. This is a growth forecast if you save Rs.1000/= per month @ 12% rate for 40 years.
Points to note:
1)In just 7 years, interest income will be higher than your annual investment.
2)In 40 years your will have saved over 10 Million, but if you delayed your start by 5 years you will have only 5 Million.
If you think 40 years is a lot of time, Here are some ways to boost your growth.
・ If you manage to find 15% rate it will take only 34 years to achieve 10M mark
・ If you start with a 100,000 and contribute 24,000 per year, It will take only 27 years
・ If you increase your monthly contribution to 5,000 it will take 22 years
・ If you manage to save 10,000 a month it is just 18 years
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