New Delhi: Rohit Sarin, co-founder of Client Associates and a seasoned expert in the wealth management field, emphasises that money is crucial for meeting various life needs. He recommends that individuals should invest any surplus left after expenses to gradually build a significant corpus, ensuring they do not face financial constraints.
His firm manages a fund of around Rs 50,000 crore. Rohit Sarin has also written a book titled "Unlocking Wealth," published by Aleph Book Company. In an interview with ETV Bharat, he discussed the importance of investing, its benefits, and how compounding can improve investment returns.
India is on the verge of becoming the world’s third-largest economy. If this occurs, Rohit Sarin notes that every business in the country, regardless of size, could potentially grow at least fivefold, if not more, over the next decade. India ranks third in the number of billionaires and millionaires globally, and its middle class is projected to reach 41 per cent of the population by 2031.
In many ways, there has never been a better opportunity for individuals and families to build wealth through smart savings, sound investments, calculated risks, and other strategies, as outlined by Rohit in his book.
He also emphasised that it's never, too early, or too late to start building wealth, providing clear strategies for how individuals can become rich and grow their corpus. Rohit mentioned that if one begins investing today, the next 10 years could be beneficial for both the country's economic growth and individual financial growth. By aligning personal investments with the nation’s economic development, one can create significant wealth over the next decade.
Compounding Effect
In an interview with ETV Bharat, he provided an example of compounding interest where both the principal and returns are reinvested repeatedly. He explained that if someone invests Rs 100 and this investment grows at an interest rate of 15 per cent per year, it will double every five years and could multiply by 66 times over the next 30 years if the amount is invested for that long.
He also stressed the importance of starting investment at an early age. As soon as someone gets a job, they should begin saving their earnings after assessing their spending. As their salary increases over the years, the amount invested should also grow to create a significant corpus for various needs. For investments, he suggested people should go for Systematic Investment Plan (SIP) first, since investing directly in stocks without adequate knowledge may not yield maximum returns.
Growth of Index Than Company
Rohit Sarin advised investing in an index of a bunch of stocks through SIPs or mutual funds rather than selecting individual stocks if one has limited market knowledge. He noted that many companies struggle to sustain themselves over time. For example, when comparing the Fortune 500 list over the decades, only 52 of the original companies from the 1955 list remain. The rest have gone bankrupt, merged with others, been taken over, ceased production, or exist in less dominant forms.
This illustrates how challenging it is for businesses to consistently add value and create wealth over the long term. However, the overall BSE Sensex index has performed well, growing from 25,000 to 85,000 over the past ten years, which indicates that the economic situation of the country is continuously improving. Therefore, if one invests through the SIP method, the chances of creating more wealth are promising.
Study Before Investing
He also cautioned people not to follow every piece of advice they receive blindly. According to Rohit Sarin, it is your money, so the risk is also yours. Therefore, when you decide to invest in a particular area, you should research its future and make yourself aware of the potential risks and opportunities because it's your money at stake.
Rohit Sarin also recommended that if one can afford it, one should consult with reputable financial advisors, as good financial advisors are akin to successful doctors, lawyers, and architects. Seeking their guidance is essential for protecting and growing wealth. He added that while there is plenty of study material available for self-study these days, it is crucial to educate yourself before investing.
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