Investment Tips: Many people believe that even a ₹60,000 salary is too much to manage, making saving for the future or becoming a millionaire a pipe dream. However, financial expert and popular YouTuber Ankur Warikoo has outlined a simple strategy that can help even those with modest incomes build a strong financial foundation. This strategy is known as the 65-20-15 rule, and if followed with discipline, it can create a substantial corpus over the long term.
The Basic Formula for Expense Control
The first part of this principle focuses on fixed expenses. If your salary is ₹60,000, then 65 percent, or approximately ₹39,000, is allocated for fixed expenses like house rent, groceries, bills, children’s fees, and medicines. This amount covers the minimum needs of your lifestyle. This portion doesn’t require cutting back, but budgeting helps reduce unnecessary expenses and prevent money from flowing uncontrollably.
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The Principle of Limiting Wishes
According to the report, 20 percent of your salary, or approximately ₹12,000, should be set aside for things that add some joy and convenience to your life. These could include watching movies, going out with friends, or buying new clothes or gadgets. This portion helps balance your mind so that investing doesn’t feel like a burden and you don’t feel guilty about spending.
Regular Savings Will Benefit You in the Future
The most important component of this model is 15 percent savings, or ₹9,000 per month. This amount alone has the potential to create a corpus worth crores in the future. However, a crucial step before that is settling all debts. If you have a large home loan, personal loan, or credit card balance, the compounding of interest gradually erodes savings. Therefore, paying off debt should be a priority before starting to invest.
An Emergency Fund Comes in Handy
After repaying your loan, the next important goal is to create an emergency fund. This amount should be equivalent to three to six months’ salary, which can be kept in safe options like a savings account or liquid funds. This amount provides a cushion against sudden job loss, illness, or any unexpected expense, and prevents one from taking on expensive loans. The advantage of liquid funds is that they offer better returns than savings accounts and provide immediate access to funds when needed.
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SIPs Create a Fund Worth Crores
Once both your debt and emergency funds are in place, investing ₹9,000 per month in index funds through a SIP is considered the simplest and most reliable method. Indexes like the Nifty 50 and Sensex have averaged returns of around 13 to 14 percent over the long term. With this rate of return, a monthly SIP of ₹9,000 can reach ₹1 crore in approximately 20 years. While returns may appear low in the initial years, the magic of compounding rapidly increases capital over time.
Long-term investment is essential
If a person starts this plan between the ages of 30 and 35, financial freedom can be achieved between the ages of 50 and 55. This accumulated fund can be used for retirement, children’s education, buying a house, or any other major goal. This principle is effective only if the person continues to invest every month without any break. Increasing expenses or stopping investments can derail the entire goal. Therefore, it is essential to consult a financial advisor before starting any investment.