The secret to wealth creation is Consistency

Grand Canyon is on my travel bucket list. Do you know how the Grand Canyon was created? The Colorado River sculpted the one-mile-deep Grand Canyon over millions of years. This phenomenon demonstrates how consistent weathering and erosion over eons of time may drastically alter the earth’s surface.

Similarly, to how the Grand Canyon wasn’t formed overnight, our investments require consistent contributions and decades of appreciation to create wealth. The Colorado river chiseled away the rocks to form Grand Canyon over a period. Time is our best friend when it comes to investments. In fact, time is the greatest asset we have at our disposal, and it would be a shame to let it go to waste.

In this piece, I will discuss how powerful it may be for your wealth creation journey to do monthly SIPs consistently and have an investing horizon spanning many decades.

Mr. X became my first individual client in December 2003, the year I entered the field. When I met him for the first time, he was already investing in mutual funds. With his current portfolio, I inherited his Rs. 2,000 per month SIP in XYD MF (Equity Diversified Fund)which he began on December 3, 2001. I did not know that one SIP would educate me so much about wealth generation and become my favorite case study. The most talked about SIP.

Lesson 1

Invest for the long term and let compounding work its magic.Most investors commit the error of trading and timing the market. When investing over the long term, market timing is impossible. Time spent in the market is more crucial than market timing if one wishes to experience compounding rewards. Examine how investing more time in the market may dramatically increase your wealth.

Sharing a screenshot of Mr. X’s portfolio statement from the XYD MF . You can observe that the longer you let your investment grow, the better the chances of getting inflation-adjusted returns and wealth creation.

Lesson 2

Start with any amount.A lot of times, people don’t start investing, thinking one needs a large amount to invest with. That is a myth.

Whether you have 1,000 rupees or one million rupees, it makes perfect sense to invest right now and let your money work. Wealth is created over time, not overnight. To create wealth, one must be patient and consistent. The Key is to start early.

Investing is a journey, and there are always new landmarks to reach and previously undiscovered insights to uncover. Investors should continue to focus on sticking to the basics of the prudent investment.