Principle 2: Invest Regularly

"Little drops of water make the ocean mighty" (boond boond se sagar banta hai)

Each one of us can relate to the saying above. "Invest Regularly" is the simple mantra to get wealthy. Not everyone is born with a silver spoon. Not every millionaire is a millionaire by birth, on the contrary 80% of the millionaires are self made. You can also become rich by investing regularly. Exercise regularly for good health, invest regularly for good wealth.

If you want to be wealthy, you need to be disciplined with your investments. Whatever the market condition is, you should invest regularly. You will some units at high value and some units at low value also. This will average out your cost of buying and also the risk. If your goal is far away then invest and forget. Invest first and spend later. These little investments  (drops) will make you a ocean one day.

You can not become a crorepati in a day. There is no shortcut to be wealthy. Initially, you need to keep patience as investment may not grow much but during the later years it will grow at a fast pace. You do your part with investing and rest will be taken care by the power of compounding. It takes 80% of your time to build 20% of your wealth and 20% of time to build 80% wealth.

Lets take an example of Ajay aged 30 years and saving for his retirement. He is able to save only Rs. 5000 per month. He was guided by someone to invest his saving in a equity mutual fund and forget about it. We will see how his wealth grows. For the sake of calculation i have assumed 15% return which is neither exaggerated nor very conservative.

If you see the graph above then you will realize that for Ajay wealth started growing after 10 years. Till this time you need to be patient. For initial 10 years only Ajay was mainly contributing for his retirement, but after that his invested money also started contributing to his retirement. This is called "Money is making money".

Ajay didn't stop here and continued investing Rs. 5000. After 15 years his wealth started growing exponentially. You can refer the graph above to find out that maximum wealth is made during the last years. Even if Ajay stop investing after 30 years then also his money will continue to grow. This is because Ajay's money is working for him when is Ajay is not. Money invested by him will continue to make money for him even if Ajay decides not to invest.

Here is the detailed analysis of the Ajay's journey to become wealthy on a yearly basis.

Ajay's small investment of Rs. 5000 per month made him crorepati in 23 years. It may be long time but in practical you will increase your investment each year and you can be crorepati much before Ajay.

If you will closely observe the table above, you will find that major portion of this wealth is contributed by the interest.

Total contribution by Ajay after 30 years  =  Rs. 18 Lakh only

Total contribution by Interest component after 30 years  =  Rs. 2.53 Crore

 Major part of his wealth is from the interest component. During the last year of retirement, Ajay's self contribution is Rs. 60000 per year while the contribution from the interest (from prior investments) is Rs. 36,69,216 which is very huge when compared to Ajay's contribution. Investment is like a seed, it takes time to be a tree.

Another point to notice is that after 25 years his total balance was around Rs. 1.37 crore and after 30 years his total balance was Rs. 2.81 crore. Difference comes to be around Rs. 1.44 crore. This means that it took him 25 years to make Rs 1.37 crore and only next 5 years to make another crore. This clearly proves patience is the key. This proves another fact that maximum wealth is made during the last years of your goal.

Start slowly but be steady with your investments, it may take time for investments to grow. Remember the race between tortoise and rabbit. Be a tortoise and you will definitely win the race. You will be wealthy one day.

At the end, i would like to share a true story of Vikalp Agarwal, hailing from a lower middle class background.
https://www.valueresearchonline.com/story/h2_storyView.asp?str=30295

Read also: Principle 1: Start Investing Early

Happy Investing!!!