Greetings to the investors or to be investors. So the focus for today is how to turn your savings into wealth.

To begin, let us define savings. It is income minus expenditures in simple terms, but if you think about it more broadly, the word savings should come before spending, which reminds me of a Warren Buffett quote: “Do not save what is left after spending, but spend what is left after saving.”

Apart from storing a small emergency reserve, our savings in a home locker or an idle asset will be useless. Savings should be given wings so that it can accumulate more wealth over time. Today’s rupee will not be the same as tomorrow’s. What Rs.100 might still get you now may not be possible to buy a few years from now.

With inflation continuing to rise, we must guarantee that our savings are properly channelled into assets that may outperform inflation and provide greater returns than fixed asset classes such as FDs and insurance, which provide lower yields.

Savings should be translated into investments, and I feel that assets such as FDs and insurance are essentially saving instruments, not investing vehicles.

Starting to invest in equity, either directly or indirectly through mutual funds, is one of the finest ways to give your money wings.

Equity has yielded a compounded annual return of more than 15%. The best aspect about investing in equity is that you may start with as little as Rs 500 every month. SIPs (Systematic Investment Plans) can enable you to invest in these markets on a regular basis and offer you the long-term growth you require.

The most important thing to remember is that your money grows over time, regardless of when you start or how small your initial investment is. We believe the moment you start earning, start investing.

Any investment in any other asset type that has recently provided multi-fold returns is mostly due to long-term tenure.

Similarly, when you buy an insurance product, you continue paying the regular premium for at least 10 or 20 years, and when you invest in real estate, you keep that asset for at least 5 to 20 years to reap the multi-fold profits. 

Furthermore, when you capitalise your savings, no matter how tiny, you allow it to compound for a longer length of time, and you will be surprised by the growth.

When allowed to compound for a longer period of time, even little monthly savings of Rs 5,000 to Rs10,000 can develop into millions. 

Other asset classes can be included in the portfolio, but I’ve focused on my thoughts on investing in stock, either directly or indirectly. In general, the percentage of savings that could be dedicated to equity markets should be 100 minus your age.

Remember that if your income rises, you may always opt to increase the size of your SIP, allowing it to grow much quicker.

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