You need patience to get rich. Get rich slowly

Most of the financial advice that we get from the web is based on opportunity. People are always looking for the newest ways to make money with the least amount of work. It is not a surprise to find people struggling to make wealth jumping from one opportunity to the next and wondering why nothing is working. What we have to understand and remember is, the principles that build wealth have never changed for centuries. Unfortunately, as Benjamin Franklin says, it is still going to take hard work, intelligence and discipline to build wealth.

As a youngster who has just begun to earn you should not put your savings into risky investments hoping to make a killing in the stock market. Statistics are saying that out of every 100 new entrants to the stock markets 98 fall by the side and lose all their capital. With such high risks stock markets are not - atleast in the begining of your career - the place where you should invest.

You should learn how to get rich slowly. You are young and have the time required. Even small amounts saved every month will give you rich rewards in a short period say 10 years. Have a look at the following tables. Compounding interest is the trick to get rich slowly with regular savings that you start at a early age. (These are approximate estimates, to give you an idea how beneficial it is to start saving early and the benefits of compound interest.)

Rs.500 per month for 120 months at 6% interest will give you Rs.82000

Rs.1000 per month for 120 months at 6% interest will give you Rs.1,64,000

Rs.2500 per month for 120 months at 6% interest will give you Rs.4,12,000

Rs.2500 per month for 180 months at 6% interest will give you Rs.7,30,000

Rs.2500 per month for 240 months at 6% interest will give you Rs.11,61,000

Rs.2500 per month for 216 months at 8% interest will give you Rs.12,00,000

You can see it is the get rich slow method that gives better returns. Say if you are aged 25 years and you begin saving Rs.2500 everymonth for a period 240 months, at the age of 45 you will have a savings of Rs.11,61,000/-
We have taken a nominal rate of 6% p.a. If the rates are higher for these periods then you can save the same amounts in lesser number of years. If the interest rates are 8% then with the same amount of Rs.2500 saved per month you can accumulate Rs.12,00,000 in 216 month, that is in 18 years instead of 20 years. The moral of the story is

• Start saving early
• Save for longer period
• Don't be in a hurry
• Get rich slowly