Friday, December 19, 2008


The change is the only constant thing in life. I have observed in last few years that our society of Northeast India have greatly changed their attitude towards investment. Now a day’s most young men and women have started talking of investment at the beginning of their career itself. A few mothers, now senior citizen, have also called me up to ask how their daughters can be made investment Savvy. One of my classmates asked can really any person from middle class be a multi - millionaire (crorepati). How much time would it take? She was not asking about business enterprise. She wanted to know if any salaried daughter ever can be a millionaire while pursuing the path of honesty and integrity .The person was a single mother and raised her daughter with great care and through lot of hardship. She is happy that her daughter grew up well and is occupying a decent position in a Multinational Company now.

My reply to the friends was that her daughter (for that matter any body) being a young person of 23 years and earning a decent salary is an obvious candidate to become a multi-millionaire before she turns 53 years. But trait of a prospective millionaire is patience, hard work and attitude towards saving and investment. She must be frugal in her habits and must not be spendthrift .These traits and habits are very rare in younger generation but not impossible. The mother was not very convinced and again asked how much money would she require if she start investing from 2008? It will depend on the money she can afford, was my reply.

If her mother, maternal uncles or paternal uncles donate her around Rs.75, 089/- at this time she can be crorepati in 35 years by investing in good Mutual fund. There are a few persons who kept on investing Rs5233/- per month in the account of their daughters from First September 1992 and found that at the end of fifteen years on 31st August 2007 she received a sum of Rs Fifty lakh on 15th years. If they could have spared double the amount the net realisation could have been a crore. But most important thing is not how to become a crorepoti but to develop the habit of saving and investment on a regular basis. How can that are achieved?

This can be achieved by explaining the magic of cumulative effect to children. Take them to a bank early in life and show how a bank or post office operates. Give them a piggy bank and ask them to collect and save one rupee coin whenever government Mint issues it. Let the entire monetary gift, received by them every year from their relations, be deposited in PPF account. Explain to them what PPF is.( LIC’s single premium policy, Jeevan Astha, is excellent for children& elders where return is 10% without tax for 10 years, with tax rebate under 80C. It is open till January only! No other plan provide such higher return with safety)
Show them how they can build up a fortune through the magic of cumulative effect. A small amount collected and saved regularly can make our children a millionaire. The fact can be noted from the example given here under. Take the children to ATM. Show them how these are operated. The children would be excited. Some of the modern schools have stated teaching at the primary level, how to plan marketing, how to budget and how to save money. These are fundamentals of life. Parents can take initiative and can coach boys and girls to save money and ask them to buy a book on general knowledge rather than buying an expensive garments, shoes and cell phones as they grow up.
Returns In 10 years In 15 years In 20 years
9% 5168 per month 2643 per month 1498 per month Rupees
12% 4348 per month 2002 per month 1011 per month Rupees
15% 3634 Pr month 1496 per month 668 per month Rupees

The above table clearly shows that assuming a return of 9%, a monthly investment of Rs. 1498/-for 20years can give an investor a return of Rs. One million. The 9% interest is available in Housing companies, and in many other corporate houses and also in banks. In case the person wants to invest in Mutual fund as low as Rs 668/- P.M. also can given him a million in 20 years. If a person can afford Rs 3634/- per month to save he can be a millionaire with in 10 years time. To become a millionaire is not very difficult as it is made out to be. The required qualities are the patience, hard work and formation of habit to spend less and save more for brighter future.


1 comment:

Anonymous said...

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