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Get rich slowly vs quickly – A comparison

Market is a mechanism for transferring wealth from the impatient to the patient – Warren Buffett.

In movies sometimes we see that all it takes is one song of few minutes by which time the hero who was washing cars for a living zips along in a chauffeur driven limo ! Real life though is not that easy, and the road to riches are not easy too,  unless one happens to be Rajinikanth ( both in his movies and in real life !).  

Getting rich quick is what everyone dreams of and as we have seen unless one is smart even keeping what we have is tough. See link : Five crores to four cows !

Getting rich slowly on the other hand is much easier as SIPs are there and we can invest monthly, though some disagree with that and think it is easy to start an SIP but tough to keep it while markets become volatile. this is true as many who had started SIPs in 2007 stopped by 2011-12 as they did not see much return but after 2013 markets turned up and those who held on made decent returns

My take is that, SIPs offer a simple (but not easy way out as the discipline of staying the course matters and i dont think that is very tough if one understands few things ) :

1. No other way to increase allocation to equities for as little as few thousand rupees per month.

2. Since you buy monthly you are unlikely to bother about the negative news ( Greece down or China down etc) and focus on the longer time frame automatically.

3. Since you average the cost by buying every month, you automatically buy more when market is lower which is the very opposite of what most do, they buy on hope when market goes up and sell in fear when it goes down.

4. You may not become a dollar millionaire  by investing 15,000 Rs per month for 15 years but you could end up with 1.4 Cr apprx at 18% pa returns over next 15 years, which is pretty good. ( Rs. 15000 p.m invested in Franklin Bluechip for last 15 years is now worth 1.59 Crs as against invested value of 27 Lacs, returning 20.9% p,a on average but start 5 years back ie since 1995 and curren value is Rs. 5.5 Cr vs 36 Lacs invested)

5. This would also mean that if you are 35, you could achieve this by 50 or wait till 55 for building a good retirement plan with SIPs. and earler than 55 if you are younger.

What is more this is achieved in a much simple manner compared to trying to get rich quick, and is hassle free, as it is said to be a good driver one need not understand how and engine works but just how to drive similarly one need not understand stocks and market cycles to invest but can do it easily via SIPs.

Disclaimer : Mutual Fund investments are subject to market risks, please read the scheme documents before investing. Past performance may not be repeated in future.




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