How Recurring Deposits can make you a millionaire

Who doesn’t want to become rich quick, particularly when you have just gone past a rough patch in life because of scarcity of money. Unfortunately money does not have a shortcut path (except if you are lucky to win a lottery), but making money is a child’s play. Yes, you heard me right, you can become rich just by playing a child’s game with yourself.

If I will tell you that your recurring deposit in your bank has the power to lift your standard of living ten folds. Don’t worry I am not a marketing agent for any bank, and I not not doing a publicity for recurring deposits. I am trying to make a point that a simply “savings & investment scheme” like recurring deposit can earn you a lot of money. I know what you are thinking, if becoming rich is so simple then why not every body in the world is rich. The best thing about recurring deposit is, it is in easy access of majority of population of this world. The second good thing about recurring deposit is the freedom it gives its users to save on monthly basis. If you decide to save $100 each month, then in a year you will have $1200 in your kitty. This is where the charm of recurring deposits ends for majority of people.

Investors treats recurring deposits very differently than majority of people. Lets try to scan the mind of an investor. When an investor says that he will save $100, he actually means that “he will save $100 each month and he will never buy liabilities from those $100“. This statement is perhaps the most important statement a common man can learn to become rich. Never spend your savings to buy liabilities, instead buy assets with your savings. Liabilities like a car, house, etc increases your expenditure while assets adds money to you pockets. So important is to understand that you are in this business of investment to accumulate more and more of assets.

Imagine that you have a huge piggy bank. Each coin $1 you will add in the piggy bank corresponds to an assets. Suppose a piggy bank will be full if you will add one million $1 coin in your piggy bank. The best part of this piggy bank is that it gives you interest on your savings.

• Suppose your piggy bank had only one coin in it in year 2000 giving an annualized return of 7% per annum. After one year $1 will become $1.07.  Your annual profit is $0.07
• Suppose your piggy bank had (365×1) number coin in it in year 2001 giving an annualized return of 7% per annum. After one year $365 will become $390. Your profit is $25.0
• Suppose your piggy bank had (365×2) number coin in it in year 2002 giving an annualized return of 7% per annum. After one year $730 will become $781. Your profit is $51.0
• Suppose your piggy bank had (365×3) number coin in it in year 2003 giving an annualized return of 7% per annum. After one year $1095 will become $1171. Your profit is $77.0
• Suppose your piggy bank had (365×4) number coin in it in year 2004 giving an annualized return of 7% per annum. After one year $1460 will become $1562. Your profit is $102.0
• .
• .
• Suppose your piggy bank had (365×20) number coin in it in year 2020 giving an annualized return of 7% per annum. After one year $7300 will become $7811. Your profit is $511.0

It means, if you save $1 each day then after 20 years your savings invested on assets will give you a passive income of $511 each year. If you have 100 such assets then it means in the year 2020 your annual income will be 20×511=$10,220/year. These $10,220 will be added in your pocket without any effort.

The bottom line is :

1. Decide how much you can save per month $100 (say)
2. Invest this money to buy assets, it will give return @7% p.a. (say)
3. After twenty years your savings will amount to $24,000
4. These savings will fetch you returns of $1680 @7% p.a.
5. If you have hundred such assets, then it will give you returns of $1,68,000 per year.

Don’t just save, invest your savings to buy assets. Never buy any liability by your savings

Related posts:

1. How to Get Money Rich : Think and become a Millionaire.
2. Create An Asset and Become a Millionaire
3. How to make money in the stock market