Nobody wants to be wealthy when they are 90 years old, have health problems and cannot really enjoy the wealth itself that they might have taken decades to build.
We all want to get rich and live a great life when we are young. We do not want to look at the price when ordering food, we might want to order from a great restaurant, sponsor drinks for our friends at the bar or maybe even randomly buy a gift for our parents or spouse.
Now that is what I call a great life. Being able to anything we want with our money and knowing that money is not something that is a problem.
All it requires is a proper and conscious plan to save and invest regularly, without involving hours of research picking stocks or watching YouTube videos trying to find that one crypto coin that will make you an overnight millionaire.
The strategy is A.S.A.I.
Pretty much like the Acai Berry but with an S.
Let’s tackle the A.S. part first – Auto Savings
Look neither you have time nor me, nor anyone else to come home from 10 hour work days and then try to find time and put in effort to make transfers for our savings, emergency funds or even investing.
We want to come home, or get done with work and then relax, live life, spend time with our friends and family.
To make that possible we need to automate stuff so that we can focus on what makes us truly happy, that is living life the way we want it.
In finance we say “Pay Yourself First”
What this means is the moment you get paid a fixed portion of your earnings should automatically go towards your savings and investments because that portion is what will make you financially wealthy.
On an average a minimum of 10% of your income every month should go into savings.
You can pretty much automate this either by creating a bank transfer mandate or simply set an SIP in a liquid fund of a fixed amount.
So for example, let’s say you make INR 1,00,000 per month paid to you on the 3rd of every month and 10% of that is INR 10,000.
So an SIP of 10,000 on 3rd itself would be awesome.
What this will do is take that money out of the picture, so in essence you only see INR 90k per month.
Now let’s move to the A.I. part, the AUTO INVEST.
It is great to invest at least 20% of your monthly income, once again automagically!
You want to keep things simple, so instead of wasting hours on picking stocks just go for an index fund, and invest into the top 50, 100 or 250 stocks through an ETF or an Index fund and go about living your life and spending time with your family.
I love this auto approach because it accomplishes multiple tasks for us. It not only allows us to build our savings and investment corpus automatically but also takes away some of our income without us even getting to see it.
That pushes us to focus on improving our income, because all our brain sees is INR 70k per month.
This would allow you to not only build a corpus that can potentially make you financially wealthy a couple decades before your retirement age but also motivate you to build proper skills, motivate you to do better at your job or business and earn more.
A perfect system if you ask me.
Here is something I really liked, this structure comes from the one and only Ramit Sethi.
These kinds of automatic systems to invest are the systems that actually create long lasting wealth for the 99.9% of us. Rest 0.01% of the people end up becoming Warren Buffett. And I for sure am not coming close to the kind of wealth he has generated.
Save automatically, Invest automatically, be rich early.