Font Size 
The secret to making crores is out
Published on Sat, Jul 21, 2007 at 14:10, Updated at Sat, Feb 02, 2008 in Money section
Tags: Union Budget 2008, Money
WAY 2 WEALTH: Small savings can churn large returns, says financial planner P V Subramanyam.
Other stories in the section:
Realty bug bites NRIs, property turns hot investment
Many NRIs are now investing in property back home.
“Compounding is the eighth wonder of the world.”
-Albert Einstein
“Take away the terms asset allocation, long term and compounding from a financial advisor’s vocabulary, and he is pretty much tongue-tied,” remarks a friend.
|
Let me show you exactly how much saving can help. Say you spend Rs 40 every day on cigarettes. Let us see what could happen if you stopped smoking.
Let's also make some assumptions and also suppose that these are valid for the next 30-years.
|
Smoker's chart | |||
| Money spent per day | Rs 40 | Rs 80 | Rs 120 |
| Money spent per year | Rs 14,600 | Rs 29,200 | Rs 43,800 |
| Money earned if invested over the next 30 years | |||
| Sensex | Rs 11,547,841 | Rs 23,095,681 | Rs 34,643,522 |
| Equity | Rs 21,099,200 | Rs 42,198,399 | Rs 63,297,599 |
| PPF | Rs 16,53,935 | Rs 33,07,870 | Rs 49,61,805 |
Nice chunk of change, eh?! What would this money be worth? Let's see: You could afford an Ivy League education for your children. Or could buy out your neighbour’s flat, have a roomier home. You don't need to care how many times your banker looked at your Form 16.
Of course, if you spend Rs 120 per day on cigarettes, you probably won’t live for 30 years!
So you don't smoke? Maybe you're a frequent restaurant-hopper? That would easily mean Rs 2,000 per week.
Keep at it for 30 years, and you would have said goodbye to Rs 15 crore. Think of the penthouses you could have afforded with that kind of moolah!
Gastronome's chart | |||
| Money spent per week | Rs 750 | Rs 1,500 | Rs 2,000 |
| Money spent per year | Rs 39,000 | Rs 78,000 | Rs 104,000 |
| Money earned if invested over next 30 years | |||
| Sensex | Rs 30,846,972 | Rs 61,693,943 | Rs 82,258,591 |
| Equity | Rs 56,360,876 | Rs 112,721,752 | Rs 150,295,669 |
| PPF | Rs 44,18,045 | Rs 88,36,090 | Rs 11,781,454 |
Continued on next page...
More Headlines from Money
| Related links: | |
Total Comments: 24
Read Comment | Post Comment
One point is that generally people miss is that even small savings can help. generally we have a habbit of
Read Comment
if we take inflation rate 5% for next 30 years. Would you please give NPV(Net Present Value) of saving?
Read Comment
Having read the article and all the comments, I am convinced that ITC, Tata Motors, Indian Hotels, are all good
Read Comment
Well the article is nice piece of work but I dont think this is an organised way.This is basically a
Read Comment
Any way the view of the writer is different, we can accept it for a thinking
Read Comment