Ten Commandments of Wealth Creation

Financial Planning

- Shibu Das

01) Start Early, Start SIPs - Compound interest is akin to a tiny snowball gaining momentum as it rolls downhill - the farther it goes, the more it grows. At the age of 25, if you start investing ₹10,000 monthly, increasing the investment amount by 20 per cent yearly and assuming a long-term return at 12 per cent per annum, you will retire at 60 with a corpus of ₹91.96 crore. If the same exercise is started at the age of 40, you will retire with just ₹4.8 crore! As Albert Einstein famously remarked, "Compound interest is the eighth wonder of the world. He who understands it earns it and he who doesn't pays it." 

02) Live Within your Means - Spending more than what you earn is a common trait among individuals in all income groups. We assume somebody who drives an expensive car or lives in a luxurious house must be financially sound. That is not always true. Some of them may simply be living beyond their means. At all times, strive to avoid credit card debt. Do as Thomas Jefferson advised, "Do not save what is left after spending, but spend what is left after saving."