How to beat One crore wealth with just 1 lakh investment?
One crore wealth can be beaten with just 1 lakh investment. Yes, it can be done if you do your asset allocation right and get a higher return by following the right investment strategy based on your risk tolerance and financial situation.
Read this complete article to know more details.
In childhood, I thought a few times about how I can be richer than my neighbors.
You may have also thought like this in your life.
Is it really possible to become wealthier than your neighbors, friends, and relatives?
Let’s understand this first with an example.
If you see the above image, a thief is running at a speed of 30 km speed.
In addition, a policewoman is running behind him to catch at a speed of 60 Km speed per hour.
However, the distance between them at present is 30 Km.
Here, the policewoman will catch the thief after 1 hour.
But if she runs behind the thief at less than 30 Km speed hour, she will never catch him.
Similarly, If your investments give you higher returns, then you can beat 10 core wealth with just 10 lakh investment.
Let’s see how it can be done.
One Lakh investment will beat One crore wealth…
Let’s understand it with different scenarios…
ROI the same for you and for your neighbour…
Let’ assume that your one lakh investment and your neighbors 1 crore wealth has given a return of 6% for both of you in 100 years.
In addition, let’s assume that you and your neighbor invested in the same ratio in real estate and gold.
|Year||1 lakh in Million||1 crore in Million|
If you see the above table, 1 lakh (0.1 million ) investment has become only 33 million in 100 years.
While at the same one crore ( 100 million ) wealth has grown up to 3,393 million.
You can see in the chart that 1 lakh investment is flat in 100 years and one crore wealth has grown significantly.
So, it is very clear that we can not beat one crore wealth with 1 lakh investment if invested in a mix of asset classes where both will get a 6% return on investment (ROI).
When 1 lakh investment will beat one crore wealth?…
Here, Let’s assume that your neighbor invested the same real estate and gold as said above case and got an ROI of 6% only.
while at the same let’s assume that you have invested in a mix of assets real estate, gold, and equity ( mutual funds, etc) and got more return than your neighbor.
In this case, you will definitely get more wealth than in the first case. ( more than 33 million).
If you see the above table, one core has grown just the same as in scenario 1) as we have assumed 6% ROI like in the first scenario.
But 1 lakh investment has grown up to 552 million unlike 33 million in the first scenario.
As we got a 9% ROI in this scenario.
In addition, you can see in the chart, the 1 lakh investment is not flat like in the first scenario chart.
At what ROI both 1 lakh investment and one crore wealth be equal in 100 years?…
If you see the above table, you can see both 1 lakh investment and one crore wealth has given the same wealth in 100 years.
But this will happen only if your 1 lakh investment gives you an average ROI of 11% in 100 years.
and your neighbors one crore wealth grows at ROI of 6%,
In addition, You can see both the grey line and yellow line in the above chart met at the same point means both the investments have given the same wealth.
But you may have got a doubt that how to get 11% ROI in your investment i.e 5% extra than your neighbor?
Yes, a 5% extra return is possible if you invest in the equity market along with gold and real estate.
Every Investment will not give you a constant ROI every year.
The return can be low, high, zero, and negative also
Read this article about low return and zero return scenarios, How your overall return will be compromised.
So, if you invest in gold, real estate, and equity-based on your risk tolerance.
In case one asset is giving a negative return, the other two assets may give some positive return.
and if you re-balance the portfolio again and again periodically, In a long period, you will end up accumulating more wealth than investing in only in fewer assets like gold and real estate.
If that happens, As I said in this article, Your 1 lakh investment also can beat your neighbors one crore wealth after some time.
How much money you should invest today to beat one wealth in 35 years with ROI?…
Some of you may argue that we will not live for 100 years and my age is 25 years, and I would like to beat my neighbours wealth of 1 crore in 35 years.( at your retirement).
In addition, You may say that you are ready to invest more than 1 lakh.
Let’s check that scenario also with the below images.
If you see the above table image, If you can invest 19.95 lakh at 11% for 35 years, Your investment will be able to beat 1 crore wealth.
In addition, you can see in the chart that the yellow line crosses the grey line and ended much higher than the grey line.
and the wealth created also is very huge than your neighbor if you invest 19.95 lakh today at ROI 11% for 100 years.
I do not know that you really get a 5% extra return if you invest in the equity market along with real estate and gold.
One thing I know is investing in a multi-asset portfolio will increase your overall portfolio return.
So, neglecting equity and not investing enough both are bad ideas.