How to get rich

Most of our time progressively after we reach 10 years of age probably goes in thinking how to make more money. It is very apparent and there is no guilt to admit that every man or women want to make more money to leave a comfortable life with all the materialistic source of enjoyment at his or her beck and call. However, how many of us really get to see so much of money that helps us to forget the struggle of everyday life? How many of us want to become Ambanis or Buffet or Gates of the world. Potentially, all of us!!!

However, we know that everyone cannot become richer to be included in the Forbes list of super rich. But at the same time it is also true that with some discipline we will be able to amass a sizeable chunk, if not more. So what is that most of us need to do to get rich? It appears to me that there is only three ways of getting richer

1. Be an entrepreneur and have your own business
2. Invest in land
3. Invest in Shares and Stocks

Most of the super rich falls in first category except for the world’s richest man, Warren Buffet who falls in the third category. As availability of land is constant and the population will continue to rise it is a matter of just supply and demand that indicates that a good investment in land will reap a rich reward. However, it is equally true that you must have a good education to be successful in any of the three categories though there a plenty of examples in the first category that have made it to super rich grade without a good or any formal education. But statistically that figure is insignificant and most of us would do good to have a solid education under our belt.

Out of all the three categories I believe the best that an average person can do is to invest in business. It is not very complicated and only requires a knack of picking the right business that will grow over a period of time. You don’t need to invest as if there is no tomorrow. Invest small but regularly so that the time compounding will keep your nest egg growing without any effort from you. Pick up business that sells products used by the masses. Invest small amounts but start early to gain the effect of time compounding. Keep a long term horizon to ride the short term instability in the market. Buy low and keep it for ever. Don’t trade. Buy into business that will keep growing and in turn reward your pick and patience.

Just imagine a $100 investment in a good company done on a monthly basis for 25 years with only a conservative 8% compound rate of return will fetch you $88,361.25. You gained $58,261.25 or close to 200% on your investment of $30000 over a 25 years period. If you just bump your investment to $500 every month for 25 years and look at gaining the same conservative 8% return then your investment will fetch you a handsome $441,806.23. You gained $291,306.23 on an investment of $150,000. Time flies and your posterity will thank you to make them rich and who knows obnoxious richer.

Stock markets historically have been known to give 10-12% return if you just buy and hold for long term and by long term I mean more than 10 years. The investment of $100 or $500 with just 10% return over a 25 years period will give you $119,001.44 and $595,007.22 respectively. No where you can get this return unless you don’t fall in either the first or the second category listed above.

So start investing now and reap the benefits down the line. I will write the next column to achieve a Million Dollar wealth in your life time. Stay tuned.