Getting Rich – How to increase your networth to crores?

Networth

“I want to get rich.”

I turned around to face Ankit, my young cousin, who was visiting me.

“What do you mean?” I asked.

“I want to see myself with a networth of a few crores.” He said flashing the latest issue of the magazine that has the list of the country’s Richest.

“How should I do it?” he followed up.

“How many crores do you want?” I decided to have some fun.

“Many. 5, 10, 25, even more.”

I was taken aback with the pace of the discussion. Before giving a response, I took a deep breath.

“Ok. Let’s take the easiest option first. 

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Saving for Child’s Education – Is it enough?

Saving for Child's Education - Calculator

In my recent workshop in Gurgaon, one of the topics that came up for discussion was “child’s education”.

One of the participants, let’s call him Ashok, mentioned that he pays Rs. 25,000 a month as fee of the school where her daughter studies.

It ensued a debate on how education expenses have risen dramatically over the past 10 to 15 years.

Ashok himself incurred only about Rs. 1 lac to complete his engineering – 20 years ago though.

Yet another participant mentioned that he spent just about Rs. 2 lacs as fee for his engineering and MBA.

I couldn’t resist mentioning that my own MBA – all tuition, lodging, travel and fun expenses included was completed in less than Rs. 1.5 lacs.

In fact, my entire year school expenses including fee in Class 10 was Rs. 10,000 only. This is a far cry from the fee of Rs.25,000 a month that Ashok pays for his daughter.

Of course in all these cases, the people went to Government funded and subsidised institutions, which charged only a nominal fee.

Times have changed though. The government institution doesn’t cut it any more.

As a parent, the one thing that you want to prepare your child for is to be ready for life in the best way possible. You want to equip her with the necessary skills and knowledge. You want the child to have an exposure that enables her do her best in life. You want her to stand on her own feet.

There’s a new breed of educational institutions (Schools, Colleges, Universities) that promise the fulfilment of these conditions.

You want the best for your child. Period.

However, what does it mean to you in terms of money? How much would you need to invest for your child’s education?

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How much will you need to Retire? Updated Calculator with 9 scenarios

Retirement Planning Calculator

For all the financial savviness that one might have, numbers still find a way to stump us.

This is what exactly happened with Vaibhav.

“You will need Rs. 25 crores as your retirement fund.” I announced to him after inputting the numbers in the retirement planning calculator. I was working with him on his financial plan.

“What! Really?” was his instant reaction.

“Yes. Why do you seem so surprised? Did you have something else in mind?”

“Well, I had done some back of the envelope numbers for my retirement. But this one is way off what I had got.”

“Hmm. What did you factor in as post retirement inflation and rate of return?”

“Well, I took more aggressive numbers – higher rate of return and lower inflation. Though I understand that it may not be the right thing to do. I also see that my life expectancy assumption at 80 is lower.”

“Yes, that’s a big mistake one can make. My question always is “what if you lived longer?”

“You are right. It’s better to plan for a longer life. Anyways, I guess I now know what I have to prepare for.”

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Retirement Planning Calculator – revised

Retirement Planning Calculator

Good planning depends on two things:

  1. To have a goal
  2. To establish a path to reach that goal.

Financial Planning is no different.

Once you zero down on your goals, you need to know what would it take to reach that goal and build an action plan.

One of such goals that everyone plans for is Retirement, or a more modern phrase, Financial Freedom.

Call it by any name (not quoting Shakespeare here), the purpose is the same – to know, how can you retire / achieve financial freedom as soon as possible.

Let’s use our retirement planning calculator to figure this out.

The Retirement Planning Calculator

Few months ago, I had shared with you an Excel-based retirement planning calculator. To say the least, it was a little simplistic. It only told you a constant amount that you need to invest every month.

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