You all have goals and most of you’re investing towards the same.
Other than your goals like retirement, child’s higher education etc.; have a goal of creating huge wealth in next 20 years.
We’ve seen through various examples how many funds have multiplied wealth by 40 times to 100 times during last 20 years.
We believe that equity funds would be able to provide 18% returns over next 2 decades; this means your wealth can multiply by 27 times in next 20 years.
At 18% annualised returns, every Rs.10,000 you invest per month, would be worth more than Rs.2 crores after 20 years.
Those of you who are investing for 5 years or more, regularly through SIPs, have already started experiencing the power of compounding and equity.
Those of you who have accumulated Rs.1 crore so far and doing a SIP of Rs.1 lakh per month (through equity funds), can expect to be worth around Rs.60 crores in next 20 years. That is USD 10 million in 20 years. You would be in top 1% of not only India’s population but the world population itself.
If you’ve Rs.50 lakhs invested in equity MF so far and is doing a SIP of Rs.50,000 per month, the value after 20 years would be Rs. 30 crores. With USD 5 million, you would also be in the cream of world population, top 1%.
The above numbers are arrived with the assumption of 18% annualised returns.
Someone who has Rs.2 crores in equity funds asked me how much he needs to save every month to achieve Rs.100 crore in 20 years; assuming 18% annualised returns. Roughly the amount works out to Rs.1.23 lakhs per month.
He asked how much that Rs.100 crore is worth today? Assuming a long term inflation rate of 6%, it is worth Rs.31 crores today. This means what you can buy with Rs.31 crores today; you can buy the same with Rs.100 crores 20 years down the line.
He was stunned by the power of equity, power of time and power of compounding. He has started investing Rs.1.5 lakhs every month.
As India moves from a low income per capita to a middle income per capita country, as we move from a $2 trillion to $20 trillion economy, over next 2 decades, with nominal GDP (real GDP + inflation) growth rate of around 15%, 18% annualized returns from stock market (equity funds) look very much possible.
As you are aware, stock market growth happens in spurts with a high degree of volatility. In bear markets, even a diversified equity fund falling by 40% or so is not uncommon.
You’re reaping rewards now for sitting tight in one bear market. Even in a secular growth country like India, we’ll go through couple of bull and bear cycles in next 2 decades. If you can sustain the temperament and the patience you’ve developed in last few years for next 2 decades, huge fortune is all yours.
The most difficult part of investing is staying the course for long run without worrying what is happening in the markets. If you can develop the right temperament to stay the course for long; you can build a great fortune from the markets- be it Rs.30 crores or Rs.60 crores or even Rs.100 crores.
Our family has achieved financial independence by following what we are repeatedly sharing with you. By teaching you, I learn and my conviction becomes stronger. I’m absolutely convinced that if one can master his behaviour, huge fortune can be made through markets over long run. Time and discipline is the key.
Our key focus and main job is to ensure that you invest regularly over long run and stay the course without break. Everything else is secondary. The daily sms OR blogs OR emails are all aimed towards this purpose. As Munger says, repetition is the heart of instruction and we would repeat tirelessly for both your and our benefit.
Have a big goal, invest towards it regularly, give long time for compounding, stay the course and build a big fortune.