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I can save Rs 25,000 per month. Can I become a dollar millionaire?

A dollar millionaire is someone who has $ 1 million (USD) of wealth or Rs 7 Cr. With a million, one is assured of a comfortable life, irrespective of where you live.

The answer is yes. As long as you stay with the financial journey, you will.

Even super investors like Warren Buffett have created their extraordinary wealth through consistent investing and compounding of their wealth patiently over time. It is well within the reach of the common man.

Let us understand ‘being a dollar Millionaire’ first:

A dollar millionaire is commonly referred to as someone who has $ 1 million (USD) of wealth. This translates to about Rs 7 Cr, as of 2019. With a million, one is assured of a comfortable life, irrespective of where you live. This goal, though it may look ambitious, is within reach of most people as long as one plans their investments well and are consistent with their contributions. This assures a comfortable life, despite inflation which can eat away the value of the million over time. 

If you stay the course, one can expect to become a millionaire in about 20 years. If you can commit to a higher starting amount, then this journey becomes much shorter.

How to go about this:

1. Start saving and invest regularly. Setting aside some money every month is important.

2. As an investor, you have a few choices to invest. The longer the time frame, the lesser is the risk across certain avenues such as equity. The following table provides a rough thumb rule to use, while expecting returns from different investment avenues.

3. You can invest directly in stocks or bonds, or use Mutual Funds as a vehicle to invest. Given overall tax implications, ease of investing and effort required, mutual funds have been a widely used tool to achieve such objectives – both in India and in developed markets like the US and Europe.

How to plan and what to expect:


In order to achieve this goal, one would need to do the following:

1. Start with a regular monthly saving. In the table below, we have provided three different options, starting at Rs 25,000 per month.

2. One can invest either in Equity Mutual Funds or Debt Mutual funds. Based on past returns, we have assumed an expected growth rate of 12% per year for Equity Mutual Funds and 6.5% per year post tax for Debt Mutual Funds.

3. Since your salary will also increase over time, keep increasing the monthly saving by 10% each year.

If you stay the course, one can expect to become a millionaire in about 20 years. If you can commit to a higher starting amount, then this journey becomes much shorter.

What are the risks:


1. Inflation: As time passes, inflation will eat away the value of the $ 1 million. One can assume inflation, assumed at 5% per year, will dilute the value of your money by half in 14 years (Rs 7 Cr in 14 years will be worth Rs 3.5 Cr in today’s value). But what you have will still be significant and can help you enjoy the next 25-30 years with ease.

2. Equity Mutual Fund returns: The 12% per year return assumption is linked to past performance of equity mutual funds and the long term growth of the Indian economy. Though this would work in the long term, there will be periods where either stock markets don’t grow at the same pace as the economy or companies earning growth will be slower. ‘Experts’ will keep throwing up doomsday scenarios, but don’t be thrown off by those. Overtime, data clearly shows that staying invested in equity pays off over a period of 6-7 years.

This journey of investing, with a clear goal requires commitment and staying the course. Several folks who started such a journey, many years back, now have a secure life. The journey is well within your reach, too.

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