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Achieving financial independence can be challenging, especially on a modest salary. However, by taking small steps with careful planning, budgeting and financial decisions, individuals can move closer to financial independence. Here we bring a success story of a middle-class professional who steadily built over Rs 5 crore at a modest salary of Rs 25,000, in just 11 years. Surprisingly, he achieved the rare feat without any inheritance or business income.
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Before delving into his success story, here's the takeaway. He shaped his journey of growing wealth from scratch with disciplined saving, long-term investment, and strategic career choices.
Journey To Building Net Worth of Rs 5 Crore
In 2013, the middle-class man began his career with a monthly salary of Rs 25000. Notably, from the very beginning, he set aside 25 per cent of his earnings as savings. His financial discipline grew stronger when he shifted back to his hometown after his house rental expenses were eliminated. This increased his savings rate to 75 per cent. With this approach, by 2024, he build a net worth of Rs 5 crore, a milestone which he calls his biggest achievement of the year.
During a conversation with INDMoney for its YouTube channel, the man discussed his financial journey and credited his financial transformation to three key factors: prioritising career growth to increase his income, staying committed to equity investing and practising delayed gratification. He also noted that having no debt and not paying rent gave him a significant head start.
Stock Market and Long-term Investment
During his stint as a wealth manager, a defining moment came in his investment journey. He came across an ITC employee whose employee stock options had grown into a Rs 5 crore corpus over two decades. This real-life example solidified his faith in the power of long-term equity investing and compounding returns.
In 2013-14, he entered the stock market and gradually built a portfolio that yielded annualised returns of around 18-20 per cent. Furthermore, his stock-picking approach centred on small companies in growing industries, avoiding highly saturated market leaders. Importantly, he preferred businesses that generated healthy cash flows, had minimal debt, and avoided red flags like promoter pledging or frequent equity dilution.
Crisis Proved To Be A Turning Point
Interestingly, the 2020 market crash proved to be a turning point for him. His portfolio fell by 45 per cent during the COVID crisis. However, instead of panicking, he doubled down and bought more stocks as the Nifty index dropped to the 8000- 10,000 range. Well, this aggressive move paid off, helping his portfolio recover strongly in the following years.
Current Net Worth, Expenses and Future Plans
Reportedly, 90 per cent of his assets are in equities while the remaining 10 per cent is split between cash, EPF and NPS. He also has started exploring passive income such as REITs and infrastructure investment trusts, including IndiGrid, which offers nearly 10 per cent yield.
Surprisingly, even after achieving a high net worth, he remains cautious about early retirement. His current monthly expenses stand at Rs 1-1.2 lakh. He believes that Rs 5 crore may not be enough to sustain financial independence in the long term, especially with rising costs for education and lifestyle.
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Valuable Suggestions
During the conversation, he also highlighted how pursuing an MBA helped boost his income significantly, compared to peers who joined the workforce right after engineering. He even cautioned against getting swayed by investment fads like cryptocurrencies or bankrupt stocks.
