Making Your First 1 Crore: 3 Practical Strategies

Key Takeaways

1. You can exercise three main strategies to gain wealth: excel in a job, invest wisely, or start and run a successful business.
2. Consider the potential returns against the risk. Choose strategies that provide the lowest risk and highest return for your effort.
3. Build an investment system and investing regularly is crucial to preserving and increasing wealth over a period of time.

Dr. Narish Tran: Case Study

Dr. Narish Tran, a leading cardiologist in India, achieved billionaire status primarily through his investments in Medanta, a hospital chain he started. This case study highlights two critical lessons:

• 1. Wealth is built by owning equity or a stake in something, not just by hard work in a job.
• 2. To own that equity, you need to be an accomplished individual.

The Reality of Building Wealth

Making a lot of money is harder than it seems because of the stark dichotomy between actual work and income. Achieving wealth typically requires more than just earnest effort in a job. It often requires savvy equity investments or entrepreneurship.

Building wealth also requires adequate protection of existing assets. In India, for instance, buying term insurance is a prudent way to shield your baseline wealth. It offers tax advantages and provides a safety net for your family in case of any unfortunate event.

Job Strategy: Making 1CR in a Salary

In India, obtaining a job that pays high enough to yield an annual net income of 1 CR is challenging, even more so given the country's tax structure. The most practically feasible avenue to such income involves seeking opportunities abroad - preferably in countries with low taxation, such as Dubai.

Investment Strategy: Making 1CR through Investments

The cornerstone of successful investing is understanding the investing math – which primarily involves reasonable returns and starting capital. For a return rate around 12-15%, an investor will need a starting capital upwards of 8.5 CR to make 1 CR annually.

• 1. Build an Investment System: Aim for investing systematically for a return of about 12%.
• 2. Excel at Stock-picking: If good at picking stocks, one can make up to 30% returns, depending on market conditions.
• 3. Create a High-Yield Safe Asset System: Investing in certain high-yield safe assets can bring substantial returns. For example, investing in real estate that offers a rental yield of about 7% and an appreciation yield of 5-7% can help grow wealth.
• 4. Avoid Concentrated Risk: Spread investments across a varied portfolio to reduce the risk.

Business Strategy: Making 1CR through a Business

Starting a business offers another route to wealth. Two major types of businesses can yield significant returns: low volume and high price businesses and high volume and low price businesses. Understanding the effort-value matrix is particularly crucial in this context, as it helps avoid major pitfalls and optimizes chances of success.

• Pick a Low-Effort Business: Choose a business model that requires the least effort from your end while still delivering good value.
• Secure First 100 Clients: This can help you understand your market better and refine your business approach.
• Consider the risks: Besides financial risks, other risk factors like time commitment and chances of failure should also be evaluated.
• Identify and Fill the Gaps: It's crucial to recognize your limitations within the business, whether in terms of skills or time, and address them accordingly.

Indeed, one can apply all three strategies to attain financial success. However, one must remember that each path requires thoughtful planning, calculated risk-taking, and consistent effort.