Have you ever wondered how wealth seems to snowball for some people? It’s a common observation that the journey to the first significant financial milestone, like earning one crore rupees (ten million), often feels like the most challenging part.
But what happens after that? Insights from Rishabh Dev’s Simple Wealth Project reveal that reaching the first crore is often a critical inflection point, after which net worth tends to grow at an exponentially faster rate. This phenomenon isn’t just about luck; it’s rooted in fundamental principles of wealth creation, which are amplified significantly once substantial capital is at play.
Why Growth Accelerates Post-1 Crore
Two primary factors drive the exponential increase in net worth after hitting the 1 crore mark:
Principle 1: Money Makes Money
The core idea is deceptively simple: the more money you have, the more money it can generate through returns. The absolute return amount increases in proportion to the capital invested. Consider the impact of a 12% annual market return on different investment amounts:
- ₹1 Lakh Invested: Generates ₹12,000 in returns (Total: ₹1.12 Lakh).
- ₹10 Lakhs Invested: Generates ₹1.2 Lakhs in returns (Total: ₹11.2 Lakhs)
- ₹1 Crore Invested: Generates ₹12 Lakhs in returns (Total: ₹1.12 Crores)
As you can see, while the percentage return is the same, the absolute cash generated by the ₹1 Crore investment is significantly larger, providing much more capital to reinvest or use.
Principle 2: The Magic of Compounding
Compounding is where wealth generation truly accelerates. You earn returns not just on your initial investment (principal) but also on the accumulated returns from previous periods. This creates a snowball effect that becomes dramatically more powerful with larger sums and longer time horizons.
Let’s illustrate with a one-time investment assuming a 12% annual return over 10 years:
- ₹1 Lakh becomes: ~₹3.11 Lakhs (Profit: ~₹2.11 Lakhs)
- ₹10 Lakhs becomes: ~₹31.06 Lakhs (Profit: ~₹21.06 Lakhs)
- ₹1 Crore becomes: ~₹3.11 Crores (Profit: ~₹2.11 Crores)
The profit generated from the ₹1 Crore initial investment over 10 years is itself more than double the initial amount, showcasing the immense power of compounding at scale.
Because of this accelerating growth, each subsequent crore typically takes less time to accumulate than the previous one. Here’s a look at how a ₹1 Crore investment might grow year-on-year at a 12% compounded annual growth rate (CAGR):
Year 0: ₹1.00 Cr
Year 1: ₹1.12 Cr
Year 2: ₹1.25 Cr
Year 3: ₹1.40 Cr
Year 4: ₹1.57 Cr
Year 5: ₹1.76 Cr
Year 10: ~₹3.11 Cr
Year 15: ~₹5.47 Cr
Year 20: ~₹9.65 Cr
Year 21: ~₹10.81 Cr
(Note: These figures are calculated using the standard compound interest formula P(1+r)^n))
The key takeaway is clear: the larger the base amount, the more dramatic the impact of compounding over time.
The Path to Your First Crore
Given the transformative power of reaching the first crore, the most critical action item is to achieve this milestone as quickly as possible. But how?
Leveraging Skills: The Freelancing Route
A highly recommended path, especially for generating initial capital, is freelancing. The underlying principle is:
SKILL -> VALUE -> MONEY
To make money, you need to provide value, and to provide value, you need a marketable skill.
Here’s a strategic approach to building income through freelancing:
Develop a Skill: Identify and hone a skill that businesses or individuals need.
Build a Case Study: Your initial focus should be on completing a project, even if it’s for a lower rate, to create a compelling case study. This acts as your resume and proof of competence.
Package Services as Retainers: Instead of one-off projects, aim for retainer agreements where clients pay a fixed amount monthly for ongoing services.
This provides:
•Predictable, recurring income.
•Higher client lifetime value (sell once, earn repeatedly).
Investing the First Crore and Beyond
Once you achieve the first crore through savings (from freelancing or other income sources), the next crucial step is to invest it wisely, allowing compounding to work its magic.
Rishabh Dev shares his approach, emphasising diversification through index funds, including large-cap, mid-cap, and international exposure. While this isn’t financial advice, it illustrates a common strategy for capturing broad market growth.
Conclusion: Your Path to Exponential Wealth
The journey to financial independence and significant wealth isn’t about finding a secret trick. It’s about understanding and consistently applying fundamental principles:
Start Early: The sooner you begin, the more time compounding has to work.
Increase Income: Find ways to boost your earning potential, with freelancing being a powerful option.
Save Consistently: Make saving and investing a regular habit.
Invest Wisely: Put your savings to work, leveraging strategies like index investing diversification.
Be Patient: Let the power of compounding build your wealth over time, especially after crossing that crucial first crore milestone.
Formulate your plan, take action, and stay consistent. Those steps, however small initially, are the foundation for potentially explosive financial growth in the future.
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