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(Precious) Words of Wisdom : "Wall Street makes its money on ACTIVITY, you make your money on INACTIVITY." ~ Warren Buffett

Housewives Too Can Become Millionaires

There's no reason why millionaire aspirations of a housewife should remain just aspirations, or be dependent on her spouse.

Presented below is a simple recipe to transform these aspirations into reality. And, I am not joking.

The secret to becoming a millionaire lies in just one simple word — compounding.


The concept is not as intimidating as the word itself sounds.

In very simple terms, compounding is the process of earning income on income. In other words, it is all about earning interest on interest on interest...

The beauty of compounding lies in the fact that: 
a.  It is a very powerful force to multiply money.
b.  It is a very simple idea to understand. 
c.  It is a very easy tool to implement.

This simple example will illustrate the 'power of compounding'.

- Aarti puts Rs.5000 p.m. in a Recurring Deposit for 30 years.
Bhavna starts 10 years later and saves Rs.7500 p.m. for 20 years.
Chitra takes 10 more years to start and saves Rs.15000 p.m. for 10 years.

Thus, all three would have saved Rs.18 lakhs.

Now, assuming they earn 10% p.a. interest, at age 55
- Chitra will have about Rs.31 lakhs,
- Bhavna about Rs.57 lakhs
- and Aarti an astounding Rs.1.14 crores.

As you may have noted, saving for MORE TIME gives much better results than saving MORE MONEY.

This happens simply because Aarti keeps earning interest on interest on interest for years together; which is much better than investing 3 times the amount as Chitra does.

This is the magic of compounding. This is the secret of becoming rich. 

As you will observe, you need 3 things to become a millionaire:
- Only a small amount of money
- A little bit of financial knowledge
- But lots of Time, Discipline and Patience

IMPORTANT: Before you proceed further, don't forget to read: Why the power of compounding fails with most investors?

Given the ingenuity and bargaining skills, I am sure saving small amounts from the monthly budgets will not be a big challenge for the housewives. All you need is to start with say Rs.500 every month and soon you will learn to squeeze more and more amounts.

And, of course, when it comes to giving time, maintaining discipline and being patient, the aptitude, potential and competence of a typical housewife is legendary.

Meanwhile, opening an RD does not require any financial expertise:

CRUCIAL: But you may need some financial knowledge if you want to fast-track your millionaire aspirations. (Read How Rs.1 Lakh Became Rs.1 Crore In Mutual Fund Scheme.)

Believe me, handling financial affairs is no rocket science. It just requires plain and simple common sense... and loads of commitment. Just six months to one year would be sufficient to become an 'informed and educated' investor.

You are intelligent enough to turn your small children into doctors, engineers and scientists. So I see no reason why you cannot turn small amounts into millions. Trust me, this will be a lot easier than bringing up kids.

Moreover, the financial knowledge is going to serve you for your lifetime and you can pass this wisdom to your kids too. So, in effect, your efforts to acquire financial knowledge are going to be rewarding for generations to come.

An Investment In Knowledge Pays The Best Interest ~ Benjamin Franklin

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