# How to be a crorepati by 40?

At young age generally people spend exaggeratedly and think that they will save when their salary will rise. But that day never comes, their expenses rise more than their income.

Dec 05, 2016 06:12 IST IIFL Rajas Pednekar |

Creating wealth is everyone’s dream but most of people do not have enough saving by 40. At young age generally people spend exaggeratedly and think that they will save when their salary will rise. But that day never comes, their expenses rise more than their income. And by the time they reach 40, when they have more responsibilities, they realized that they have not saved a single penny.

So, if you also want to be a crorepati by 40 just follow the below mantras.

Start saving at early age

A person should start investing as soon as possible because sooner you start investing the lesser amount you have to pay to accumulate a particular amount. In below table, it is illustrated that as the age is increasing the monthly investment required to accumulate one crore is also increasing drastically. The second benefit of starting to invest in early age is that the total investment to accumulate one crore is less. For example, if a 20 year old guy wants to create a corpus of one crore, he has to invest Rs 10,871 per month, assuming 12% p.a. return, till 40. His total investment would be ~Rs 26 lakh. But if a 35 year old man wants to create a corpus of one crore in next 5 years then he has to invest ~Rs 1.24 lakh per month to create the corpus, assuming 12% p.a. retrun. His total investment would be ~Rs 74 lakh. Thus, a person should start investing in early age.

Table: Monthly Investment to become a crorepati at different age and at different returns.
 Age\Returns 8% 12% 16% 20% 20 Rs. 17,462 Rs. 10,871 Rs. 6,659 Rs. 4,038 25 Rs. 29,431 Rs. 21,011 Rs. 14,872 Rs. 10,466 30 Rs. 55,162 Rs. 44,636 Rs. 36,032 Rs. 29,044 35 Rs. 1,36,214 Rs. 1,23,299 Rs. 1,11,712 Rs. 1,01,313
Source: IIFL Research

Save first and then spend
The first thing a person should do to become a crorepati is to save first and then spend. Generally, people first make their monthly budgets and then calculate how much they can save. But we advise you to do the reverse – first decide the saving and then make the budget of monthly expenses.

Avoid Debt
The biggest problem youngsters, especially the millennial, are facing is that they are trapped in EMIs. They have high aspirations and they want to fulfill them very early. So they buy luxury watches, expensive phone etc. on credit and end up paying 15-16% interest rate. Do not buy luxury watches, cars or expensive phone until you have significant investment portfolio. Otherwise remember the famous quote of Warren Buffett, “If you buy things you do not need, soon you will have to sell things you need.”

Make multiple source of Income
The income from a single source is not enough to meet all the financial needs due to changing lifestyle. Therefore, an individual should find other source of income to generate additional income. A person can opt for part time job or weekend jobs or can also take the tuitions. Generally part-time jobs pays on hourly basis but a person can get good amount of money.