The crorepati formula will help us to be rich or to say have enough money to have a financially self-sustainable and wealthy life.
The phrase money itself is a misnomer to many things ie when we talk about money, we include most of the assets we have, it may be movable and non-movable assets. Like a property, gold, cash, BANK FDs, Mutual Funds, shares, debentures, etc.
The important aspect to keep in mind is most of our assets are not liquid enough. by the liquid, we mean conversion into cash on short notice, say 2-3 days. Financial assets like bank Fixed deposits or Mutual funds can be liquidated in a short period of time.
We can’t liquidate most of the physical or non-movable assets in a short period of time.
We all want to have that magical eight-figure money in our account one day. The question is how to accumulate this figure, without compromising on our day to day lifestyle. Here is how.
Rule of 15
The mantra is to invest Rs 15,000/- every month for 15 years in an investment portfolio which gives a 15% return. It can be in mutual funds or Stocks through Systematic investment plans.
15000 Per Month * 15 years * 15% return = 1,00,00,000
We can easily cross-verify this calculation using excel using Future value formula.
Money Doubling Rule….
This rule gives us around about the idea of how much time investment will take to double your money provided rate at which investment is growing.
For example: if an investment is giving a 12% compounding return than the money will get double in 6 years. Ie 72/12 = 6
Otherway to look into it is, if we want 1,00,000/- after 6 years, so today we need to deposit 50,000/- in investment which may give 12% compounding returns.
We can use the formula for determining either Time / Rate of return for doubling our investment.
These formulas are not sacrosanct, they will give you a rough idea of maturity value over a period of time. Shubhwealth.