Friday, 30 October 2015

How a Govt Employee Can Make A Crore in less than 15 Years

Well, making a Crore is a dream for most people especially more so with employees as they have a limited and fixed amount of cash inflows in form of salary.

But let me tell you that it is very well possible for any one to save a crore in 15-20 years of time. You need to just take some wise decisions about your personal finance. We all save some amount of money every month but we are not able to utilize that money to earn more money.

Let tell you some maths, the magic of compounding. If you invest Rs.10000 every month in a scheme which earns you 15% rate of return annually then you get Rs.11042553 at the end of 18 years or if you get 12% rate of return then you will have Rs 1 crore in 20 years.

Your next questions will be where to get this 12% or 15% rate of return and how to save 10000 per month or more.

Well if we check the mutual fund returns for lat18 years then many of SBI, HDFC funds have given about 20% rate of return annually for last 18 years, isn’t that very impressive?

Now how to save extra, well we all have number of different policies like money back, endowment blah blah in hope of getting few lakhs at the end of policy term in addition to small life insurance amount. But let me tell you that you are actually losing huge money by investing in all those policies.

Let me explain this in some more detail, you invest in these policies for 1)Getting more money at the end of policy term, 2) For getting sum insured in the event of death. But such combined policies only benefit insurance companies as they deduct huge processing charges and other type of charges.

So the ideal combination for above 2 needs is that one should buy TERM policy which you will get at fraction of premium you pay for above type of policies and you will still get more sum insured. Second the premium, saved by not investing in above combined policies, should be invested in mutual funds only. This is the best combination ever. You will get much more money at the end.

Once 7th pay commission report is finalized you would surely be able to save lot more and can achieve this target more easily.

SOURCE - 7thpaycommission guide .in