How to become Crorepati in a few short steps !

How to become Crorepati in a few short steps !

Very gleefully my client, a salaried individual said , ‘I want to have a net worth of 50 crores in the next ten years , that’s why I am here to see you ‘. I couldn’t help think that he was in the wrong place, cause what he needed was to consult a magician who could take those crores out of his hat or something like that . My optimist client was sobered and his expectation of wealth ( thankfully ) toned down after I told him what he will need to save to achieve his goal . Creating wealth is both easy and difficult . Easy because we have many investment options, experts who can guide you and technology that makes money management simple . Yet it is the very same reasons that make investing tough . Today there are a slew of product offerings from insurance , mutual fund and other financial services companies to choose from . There are all kinds of advisers vying with each other for your mind space and technology is adding to information clutter like never before .

Step One : Hire an Adviser / Financial Planner
Try Picking up a good mutual fund .There are all kinds of permutation combination of market caps , NIFTY stocks , sectoral stocks , themes and many more . In fact the number of schemes are now so huge and mind numbing that it is difficult for even advisers to keep track of scheme objectives .Ditto for the wide array of insurance products . Also private offerings from miscellaneous service providers can be quite complex for lay investors to understand .Hiring an expert is the best way to go . Find a good advisory and please be willing to pay a fee for good advise

Step Two :Choose the right Products

You must have seen the this huge marketing blitz around MOST 50 Remix showing a DJ and an interesting marketing campaign . Its easy to believe that its a great product. But take the hype and hoopla out and it will appear to be similar to any other large cap oriented diversified equity fund . Why invest in a fund that has zero track record when you have funds that have a track record of over 10 years ?. New is definitely exiting but not necessarily the best to create wealth.
Choose products based on your time horizon, liquidity needs and risk -reward features of the product. You cannot buy an insurance product for your child’s education needs that are only five years away or invest in an Fixed deposit of three years for your retirement that is 20 years away . Keep an eye on costs . Various kinds of fees deducted effectively bring down your investment kitty . Besides costs compound too and in the long term they significantly impact your wealth prospects.
Also avoid products that are designed to bring returns from market timing and speculation . They work till the good times last. So commodity funds or currency funds(the latest fad ) should be avoided.

Step Three -Give it Time
Time is a generous benefactor to good investments and the worst enemy for bad ones . If you have made a good choice and if your reasons have been well evaluated learn to stick to your investments and let the power of compounding work on them.  Creating wealth is about having the right attitude . You need to have the discipline to systematically add money to your wealth pool , be willing to invest in long term assets like equities, refuse to speculate , learn to preserve capital and not be swayed by economic cycles. But to reach your destination you need to start the journey . Sooner the better.