Systematic approach to become a multi-millionaire before you turn 40

Sounds good, right? To start with, how do we define a multi-millionaire, you may ask. A millionaire has surplus funds or assets worth Rs 10 Lakhs and above. A multi-millionaire therefore has much more than this amount. We are not talking about what you earn, but what you save after your expenses.

High net worth individuals may make their millions in several ways. But for the average working professional or business owner, achieving the right balance between income, expenditure and saving is the key to a healthy bank balance. There are several financial fads that are popular in the public space, especially among the youth. Jumping into the equity markets without sufficient research is one such example. Experimenting with new age fintech offerings such as cryptocurrency or online betting are dangerous options, but nevertheless growing rapidly. But these fads might bring fortunes to less than 1% of the investors who foray into them. The vast majority only stands to lose with such risky ventures, and the loss is enormous and almost irrecoverable. We do not recommend such blind and baseless financial instruments to make money.

Our recommendations to make a healthy surplus saving of over a million is not over a short time frame. Our steps are about maintaining fiscal discipline over the next few years, diligently monitoring your expenses, and choosing the appropriate investment route that suits your exact needs.

Some golden rules to follow in order to get there.

Rule #1: Start saving today, not tomorrow or next year.

However, meagre your beginning might be, but you must get into the practice of saving right away. If you keep waiting for that next bonus cheque or stock option to come your way before you save, then it’s never going to happen. Before the additional income arrives, unforeseen expenses may arise or there may be reversal of fortunes in the stock markets, or a health emergency at home, you never know.

If you get started right away, then there can be a rise and dip in the quantum of savings depending on your monthly position. But at least a minimum saving threshold will be met. In a scheme like the PPF, even a few thousands saved per annum can give you tax-free savings of lakhs over a few years! All without you even noticing. You just need to set up a standing instruction for monthly transfer! Other such excellent monthly saving options include Mutual Fund SIP and Chit Funds.

Rule #2: Apply discretion while spending.

Several surveys among the young and salaried class indicate that impulse buying is a major contributor to their spending pattern. Regular known expenses like rent, food, travel, utility bills are never the trouble. That expensive smartphone, or luxury watch or designer clothes – things that you bought on an impulse, but don’t actually need – those are the real culprits in weakening your financial position.

Live well, no need to compromise on your creature comforts. Keep a restricted budget for entertainment and leisure. And watch any expense which doesn’t fall into these planned expense categories, with a hawk eye. Do not allow such frivolous interests to cloud your judgment.

Rule #3: Say no to debt which doesn’t earn you an asset.

Taking a home loan to buy a new house, or a vehicle loan for daily office commute. These are absolutely legitimate cases of taking credit. They result in the acquiring of a valuable asset in your name. And some loans even bring income tax benefits. So such loans are not the problem.

It’s those debt instruments which are used purely to meet expenses that are a major cause of worry. Credit cards, bank overdrafts and personal loans are the 3 main culprits. All these instruments sound very attractive on paper. But in reality, they just burn a hole in your pocket with their exorbitant interest rates. And in the case of any payment default, they just become a major source of mental stress. Just stay away from these instruments, simple.

Some people advocate the idea of borrowing money and then investing that money to earn greater returns. For instance, I might keep making purchases on my credit card, while I still have a reasonable surplus in my bank account. Remember, your bank accounts barely earn 3-6% interest, whereas a credit card charges you 18-24% interest. You do the math!

You might stand to benefit a lot if you include Chit funds as one of the investment alternatives in your portfolio. They are actually an instrument of regular monthly savings with the added advantage that the depositor can withdraw their entire investment at the time of their need, any time during the investment tenure. No penalties, no hassles. Choose a registered Chit fund house that has a long standing reputation and you can expect to gain about 7- 9% returns on your investment with absolutely no risk.

We at Shanthala Chits consider ourselves as financial partners of our valued readers and customers. The financial stability and prosperity of our investors is our primary goal. Educating our people on money management and financial matters is of prime importance in order to meet this goal in the long term. So we thought of passing on this message to our readers and investors. Hope you found them useful. Write to us, leave your comments below to share your experiences. We would love to hear from you!

About Us:

Shanthala Chits is a Government approved chit fund company with a 25-year successful track record and thousands of satisfied customers. Shanthala Chits is registered under the Chit Fund Act of 1982, the Government of Karnataka. We are one of the most popular chit fund houses in Bengaluru, known for our prompt customer support and secure investments. Get in touch with us and start with an investment scheme. We will be glad to help you out with the right scheme that matches your needs.

Anuradha C

Anuradha is a freelance writer cum corporate trainer in the IT/telecom domain with over 18 years experience. She served in senior technical and management positions in Huawei and TCS for 10+ years. Then gave up the traditional corporate ladder to go solo - in order to escape horrendous city traffic and to be at her own boss!
Anuradha C

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