Moneycontrol
Oct 31, 2017 02:08 PM IST | Source: Moneycontrol.com

Want to create wealth for long-term? Here are some investment strategies for you

Becoming rich is not about being rich or poor, it’s about being an investor

Navneet Dubey @navneetdubey91

How much money do you need to start investing to create long-term wealth? There is a general belief that you need to have a decent chunk of money to begin your investment journey. However, financial planning experts say this is not true. You can start investing even if you have a small amount to invest. But surely, you need to have a long-term plan and strategy to create a big corpus in the long run.

Moneycontrol spoke to some leading personal finance experts to understand the strategies you need to adopt to build wealth through investing. Here are their tips:

 Make proper use of your surplus or savings

Anil Rego, founder, and CEO, Right Horizons, says a person's economic status has no bearing on their ability to invest. “The only criteria was and still is, surplus or savings. Anybody with a few rupees to spare can invest today in India. Gold can be bought digitally for as little as Re 1. Mutual funds allow monthly investments of as low of Rs 100. One can also invest indirectly buying shares of small companies for Rs 5-10 apiece. Thanks to raising awareness and a better understanding of finances, people today are saving and investing from a young age. This trend is different compared to even a decades ago when saving was considered a job meant for people in 35 plus age bracket. Today's younger generation understand the value of money and hence are regularly investing,” Rego said.

 Start early even if you have small amount

Manish Kothari – Head of Mutual Funds, Paisabazaar.com says the trick lies in starting early. “Today, you can begin your investments by putting in a small amount as Rs 500 per month through the SIP mode. Even for lump sum investments, you can invest Rs 500 for ELSS funds and Rs 1000 for other categories. Even people from low-income groups can create significant wealth over time through disciplined investment. The critical part about investing is starting early. For example, with a monthly SIP of just Rs 1000 generating an annualised return of 12% p.a., a 25-year-old can build a retirement corpus of Rs 64 lakhs by the time he becomes 60. Whereas a 40-year-old would require an SIP amount of Rs 6,500 to build the same corpus in 20 years. The difference is due to the power of compounding, which allows you to make money from the gains made from the original investment. Thus, instead of waiting to save a sizeable amount before making investments, start early with smaller investment amounts and give your investments a longer period to benefit from the power of compounding,” according to Kothari.

 Become a disciplined investor

Santosh Joseph, Founder and Managing Partner, Germinate Wealth Solutions LLP says becoming rich is about disciplined investing. “Only the rich can be richer is the biggest misconception that I have commonly come across in my professional life. Nothing could be farther from the truth because many rich individuals and families end up being poor over time.  Becoming rich is not about being rich or poor, it’s about being an investor. Invest in something you believe in, have a passion for and most importantly invest in something that grows and appreciates over time to make you rich. This rule of thumb is not only true for money but for every other aspect of your life. No one is born a professional or expert. It’s those conscious daily efforts that makes one a success. There is no minimum amount you need to start planning your money. Almost everyone who is rich believed that they would be rich and had some manner of thought and work towards it. The first step towards becoming rich is to start investing. Usually, the 1st step to begin is the biggest hurdle. The discipline to keep a good investment for really long sets apart the investor from a rich investor,” Joseph advises.

Invest for long term to get the leverage of compounding

Ajit Narasimhan, Head – Savings and Investment, BankBazaar.com, advises regular investing with a long-term view. “One invests to save up for the future and build up a corpus. The idea that only the rich can invest implies that you need to have huge money to invest. That is not true. The only thing investment demands is discipline. You can save approximately Rs.200 a day, and that will give you Rs.6000 a month. If invested smartly, you can get an average interest of 10-12%. Compounding interest yields better results when money is saved over longer durations. If you set aside this sum Rs.6,000 every month from the age of 25, at an interest rate of 10%, you would have accumulated more than Rs 2 crore by the time you retire at the age of 60. The success of investing lies not in investing huge amounts but investing regularly and for the long-term to leverage the power of compounding,” he says.
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