How to become a crorepati? How to make Rs 1 crore fast? These questions consistently rank among the top internet searches. There are hundreds of books written on how to become rich quickly and how to become a millionaire, offering various tips to make money. One common piece of advice you get in all good investment books is to stay invested for the long term and witness the magic of compounding.
When you invest money, its impact isn’t visible immediately, but its growth becomes evident as the time passes. This demonstrates that patience is key in investing. Only patient investors reap the benefits of investing and witness the magic of compounding. With a little discipline and the power of compounding, you can easily multiply your money many times over. Have you ever wondered how long it takes to make Rs 1 crore? The answer depends on how much you invest and the returns you get on your investment. But earning Rs 1 crore is not as difficult as you would have thought initially.
How to use compounding benefits to become a crorepati?
Compounding allows your initial investment to earn returns, which are then reinvested to generate even more returns over time. By reinvesting these earnings within the same investment period, the compounding effect significantly enhances the value and profitability of your investment.
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How does 8-4-3 rule of compounding work?
By following the 8-4-3 rule of compounding, you can help your money grow faster. Take an example of how this rule grows money: Suppose you invest Rs 20,000 every month in an instrument that gives 12% interest per annum. Assuming it is compounded annually, you would make Rs 32 lakh in eight years. The first Rs 32 lakh is made in 8 years, but the next 32 lakh is made in just 4 years at the same rate of interest. So, at the end of 12 years, a Rs 20,000 monthly investment in an investment tool would make Rs 64 lakh.
When this amount is left for another 3 years along with continued Rs 20,000 per month investing, the corpus would be Rs 1 crore.
Your investment might follow this growth pattern:
Initial Growth (Years 1-8): Steady growth in your investment during the first eight years.
Accelerated Growth (Years 9-12): In the next four years, your investment achieves similar growth to what it did in the first eight years.
Exponential Growth (Years 13-15): In the final three years, your investment again experiences growth comparable to the previous four years.
