How To Generate Wealth
Wealth is built with patience, discipline, and consistency — not overnight. Use these time-tested principles and the power of compounding to let time work in your favour.
- 1 Avoid Debt
- 2 Save
- 3 Invest Wisely
- 4 Focus on Long-Term Growth
Investment Growth @ 12% CAGR
Suppose you invest ₹1,00,000 at an annual return of 12%. Here is how it compounds over time.
| Year | Amount (₹) |
|---|---|
| 1st | 1,00,000 |
| 5th | 1,76,234 |
| 10th | 3,10,585 |
| 15th | 5,47,357 |
| 20th | 9,64,629 |
| 25th | 17,00,006 |
| 30th | 29,95,992 |
What this means
- By 10 years → ~3×.
- By 15 years → ~5×.
- By 20 years → ~10× — compounding becomes visible.
At 15% CAGR, results will be even higher.
Debt: Use Sparingly
Avoid debt unless absolutely necessary.
Example: A home loan of ₹20,00,000 for 20 years at 8.75% with a monthly EMI of ₹17,674 results in a total payment of approximately ₹42,41,760. Early years are interest-heavy, so closing the loan early can still leave a large principal outstanding.
Save
Build the habit of saving consistently — it fuels future investing and compounds into wealth.
Invest Wisely
Diversify and align investments to your goals and risk tolerance. Explore our guides to equity, debt, gold, and asset allocation.
Focus on Long-Term Growth
Stay invested through cycles. Let compounding and time do the heavy lifting.
Review Regularly
Rebalance and review your portfolio at sensible intervals.
FAQs
How long does it take to build wealth?
There is no fixed timeline. With steady saving and market-linked investing, meaningful compounding typically shows after 10–20 years.
Is 12% CAGR realistic?
For diversified equities over long periods, mid-to-low-teens returns have been observed historically, but returns are not guaranteed and vary.
Should I prepay loans or invest?
If your loan’s post-tax interest cost is higher than your expected long-term returns, prepaying is usually safer. Otherwise, a balanced approach (part prepay, part invest) reduces risk.
How much should I save every month?
Aim for 20–30% of income. Increase this with every raise (at least 50% of increments toward investing) to accelerate compounding without lifestyle shock.
What’s a sensible review frequency?
Quarterly check-ins for contributions and annual rebalancing are adequate for most investors. React less to headlines and more to your asset-allocation plan.