Becoming a crorepati with a normal income is possible, but it depends on three t hings: 1.

The amount invested every month/year 2. Rate of returns 3. Time period the amount stays invested A disciplined approach towards saving and sensible investing choices will take y ou to your first crore as long as you allow compounding to do its magic. If you were to save and invest Rs.50,000 per year (which is slightly more than Rs. 4,00 0 per month) you could become a crorepati in 25 years. 1. Amount invested every month/year It's intuitive that the more you are able to save and invest today, the larger y our reward will be down the road. However, this table shows that even the smalle st addition to your savings each year can make a big difference in reaching your targeted amount. Amount invested per year (Rs.) (assumed rate of returns at 12%) (Rs.) Value after 25 years (Rs.) 10,000 3,00,000 29,41,000 11,000 3,30,00 32,35,000 15,000 4,50,000 44,12,000 25,000 7,50,000 73,53,000 50,000 15,00,000 1,47,00,000 100,000 30,00,000 2,94,00,000 Total investment

2. Rate of return The rate of return (the amount you earn on your savings) has a huge impact on th e amount of money you'll end up with. Different investment vehicles have differe nt expected returns. For example, Indian stocks have historically returned more than 15 per cent per year. Cash, in contrast, has a current return of 8-9 per ce nt per year. Your goal is to find a rate of return that offers the highest poten tial for growth, but at the lowest possible potential for risk of loss. Over tim e, we have found that the most prudent solution is a diversified combination of investment assets (stocks, bonds, cash, real estate, and alternative investments ). Assuming that you could invest Rs. 100 at 11 per cent per year, you would have R s. 1,359 at the end of 25 years. However, if you were able to invest Rs. 100 at 15 per cent per year, you would have Rs. 3,292 after 25 years. Year 0 5 10 15 20 25 30 35 40 45 50 5% (in 100 128 163 208 265 339 432 552 704 899 1147 Rs.) 100 169 284 478 806 1,359 2,289 3,857 6,500 10,953 18,456 11% (in Rs.) 100 201 405 814 1,637 3,292 6,621 13,318 26,786 53,877 1,08,366 15% (in Rs.)

3. Time period the amount stays invested To illustrate the power of compounding over time, please refer to the tables bel ow. In the first example, Rs. 2,000 was saved and invested each year from age 19

to 26 (for a total of eight contributions). In the second example, Rs. 2,000 wa s saved and invested each year from age 27 to 65 (for a total of 39 contribution s). At age 65, the first example ended up with Rs.1,019,161 (vs. Rs. 805,185 in the second example), even though the total amount contributed over the eight-yea r period was only Rs.16,000. The reason? The first example had eight more critic al years to invest at the same rate of return at the beginning of the investment period. That's the power of compounding! Example 1 Example 2 Age Annual investment (in Rs.) Year-end value (in Rs.) Annual investment (in Rs.) Year-end value (in Rs.) 19 2,000 2,200 0 0 20 2,000 4,620 0 0 21 2,000 7,282 0 0 22 2,000 10,210 0 0 23 2,000 13,431 0 0 24 2,000 16,974 0 0 25 2,000 20,872 0 0 26 2,000 25,159 0 0 27 0 27,675 2,000 2,200 28 0 30,442 2,000 4,620 29 0 33,487 2,000 7,282 30 0 36,835 2,000 10,210 35 0 59,324 2,000 29,875 40 0 95,541 2,000 61,545 45 0 153,870 2,000 112,550 50 0 247,809 2,000 194,694 55 0 399,100 2,000 326,988 60 0 642,754 2,000 540,049 65 0 1,035,161 2,000 883,185 Minus amount invested 16,000 78,000 Total 1,019,161 805,185 How much the amount has increased by 64 times InvestmentYogi.com is a leading personal finance portal.

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