Poor to rich is the dream for many people.

As there are 80 million out of 1.2 billion as of 2019 PPP’s International comparison program.

Now, I will explain the mistakes that poor people must avoid.

Mistakes that Poor must avoid…

Avoid Chit funds completely…

I have seen poor people use chits always for their financial needs.

In addition, chit funds are a high-risk investment option.

And default risk is very high in these funds.

I have seen so many chit fund owners running away with people’s money and making lakhs and crores of scams.

In spite of that, people are trusting these chits again and again.

Here, I advise you not to use Chits funds at all.

Instead of that, use postal recurrence deposits or postal deposits for your short-term needs.

Many argue that chits funds give money whenever they need it when you lift the chit.

But remember that for emergency purposes, please maintain an emergency fund like Rs. 30,000 in a bank savings account.

Which may be equal to your 6-month housekeeping expenses

Moreover, not losing money is as important as gaining some profit from chits.

So, AVoid chit funds, though they may give 7 to 9 percentage interest.

However, please remember that bank deposits are not completely risk-free.

But very low risk, compared to chits funds.

Poor people must avoid Daily Finance loans from private lenders…

I have seen many of these people taking private loans from the private lenders.

In addition, these loans carry an interest rate that is nearly Rs. 8 to Rs. 10 per annum.

Moreover, these loans will make you poor very quickly, and you cannot create any wealth for your future.

If you really need money for borrowing, Its better for you to go to small financial institutions like Dwakra or Spandana in the case of Andhra Pradesh.

The names of these institutions will be different in your respective states.

Poor people must not avoid insurance…

If you look at life insurance, I have seen many people who are taking this life insurance actually do not have a life insurance policy.

In addition, life insurance must be taken if there are any dependents or liabilities on the individual person.

That means when you have enough resources to look after your wife, children, parents living expenses, etc. for their rest of life, then you do not need any life insurance policy.

When it comes to poor, they must have life insurance policy that is only term insurance policy

Some unknowing will take endowment or money-back kind of policies from the investment agents.

In addition, after paying premiums for some period of time, most policies will be lapses.

people always try to have a government insurance plan first.

You should open a Jana Dhana Yojana Bank Account for availing of this government-backed term insurance.

In addition, you need to file income tax returns so that you will be in a position to get higher-term insurance coverage in the range of 10 lakh to 25 lakh at least from the life insurance companies.

Finally, poor people must try other insurance, like accidental insurance and health insurance, depending on their financial situation.

Poor people must avoid lending money to get income or to create wealth…

We have already spoken about taking high rates of interst loans and its impact.

Some poor people, when they have some surplus left, immediately try to lend money to others.

Here, poor also expect high returns from borrowers and lend for high interest.

But these loans carry high risk, and one fine day, the borrower will say, I do not have money to repay.

It happens many times again and again.

But the poor always try route only to become rich.

The real fact is that becoming rich with lending business without managing the risk in it is not possible.

In addition, you will become rich only by investing in assets like mutual funds, ppf, nps, ssy, atal pension yojana, gold, etc., not in interst business or chits funds.

The poor must avoid buying a land or house…

Poor try to buy Some government-given apartments, like Ntr apartments in the case of andhra pradesh or lands, etc.

But you should not use this strategy.

Instead, you should wait for your turn to get the apartment or land from the government in your name.

Til then, you should stay in a rental home.

If you still opt for buying these lands and apartments, which I said above, your wealth creation is not possible.

Again, use the financial assets that I have mentioned earlier to create wealth for your future.

Poor children must study in government schools only.

Now a days, poor people are running behind for the seats in private schools or colleges for their children.

There is nothing wrong with it.

But the truth is, if you spend more money for the children’s education, You may be out of money to save for your important retirement goal

So, I prefer you to opt for government school for education, and please make sure that your child is following discipline with little monitoring.

If children are not able to shine in the study, then you may send your children for skill development in farming, etc. from the age that is allowed under government rules.

As per my knowledge, the minimum age for child labour is 14 years in India.

In addition, poor also must try not to increase their standard of living by buying washing machine, AC, luxurious televisions, etc.

How much wealth can a poor person create? A case study…

A poor person to become rich may follow the investment strategy explained in this case study.

Let’s say that X and Y are wife and husband.

In addition, both of them are earning Rs. 20,000 per month.

Let’s assume that they are able to invest Rs. 5,000 per month for a period of 30 years.

In addition, they are not increasing their investment with their income growth every year.

So, Rs. 5,000 per month will be constant for entire 30 years

In addition, I advise investing this Rs. 5,000 in a balanced mutual fund of any mutual fund company.

Moreover, do not hire any mutual fund advisor for this purpose.

And visit the CAMS or K-Fintech office on your own in your district headquarters.

Here, I have assumed that Rs. 10,000 will be your living expenses.

And Rs. 5,000 will be invested in PPF for your child marriage expenses.

We have already assumed that children’s education must be in government schools and colleges.

Again, the rate of return expected from the balanced mutual fund is 10% in 30 years.

You can see in the above image that you can create 1 crore in 30 years time.

Finally, if you do not have financial discipline and are worried about withdrawing your investment at the wrong time from a balanced mutual fund,.

Then, you should prefer NPS, APY, etc. for your retirement goal.

Always remember, a Rs. 5,000 investment per month can look difficult at the start.

As the years go by, your income will grow, but not your monthly investment.

So, a monthly investment of Rs. 5,000 may not be that difficult; it may be 10 years.

Like this way, poor to rich can be achieved.

Read the article about the best business idea with low investment.

Also read about the different types of loans in India.

And read Why Tithe will make you poor?

Also read Why is 1 crore term insurance not good?

and read Why Insurance agents will become poor?

Also read about silent killer inflation in this article.

And read about Tithe—How it will make Christians poor? …

Also read: Is it good to buy a government job with bribes? …