How can a person earning 50,000 per month with 40,000 per month expenses accumulate 1 crore rupees?

Earning money to meet the needs, and wants is just one aspect of the wealth game. In order to build wealth, savings must be done on a regular basis that can provide a cushion against rude unseen shocks like – Unemployment, Family Emergencies, Paycuts, etc.

Wealth Creation: Slow Process towards Independence

In this case, let us do the math for the question

Income: INR 50000 (per month) & Expenses: INR 40000 (per month)

Savings: INR 10000 (per month)

The amount of target corpus from the monthly savings: INR 1,00,00,000

Monthly Savings: For a Better Tomorrow

Yearly Savings = INR 10000 * 12months = INR 120000

Interest(%) = 8% (assume)

Considering Compound Interest and Yearly Savings as stated, an individual will be able to accumulate a corpus exceeding INR 1Crore by the end of the 27th year

This is a long time horizon. The timeline can be adjusted in the following cases

  1. Increased Contribution Every year (5–10% = INR 8000–12000)
  2. Diversifying into vehicles giving interest higher than 8% (Stocks, ETFs, etc.)
  3. Saving more every month (cutting back on expenses)
  4. Finding a new venue to increase the monthly contribution (This can be helpful: Money: An Insane Paradox)
Postponing gratification for getting higher savings

I am attaching a link to a compounding calculator that will help you decide what amount of money to set aside every month to meet any target you might have in mind.

Compounding Calculator

Hope this helps

You can follow my blog or Facebook page on investing for getting insight into other stocks.

Happy Investing!!

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