Unlocking Wealth: Zerodha's Nithin Kamath Reveals the Power of the 1% Rule

Zerodha CEO Nithin Kamath has outlined a simple but effective plan for middle-class salaried individuals to accumulate wealth: the "1% rule." It is about cutting monthly expenses by 1% and investing the difference. Kamath stresses that there are no shortcuts to building wealth; it demands discipline, patience, and good money habits.

 

Key Highlights:

 

The 1% Rule: Reduce 1% of your monthly expenditure and invest the amount. For example, if you are spending ₹50,000 a month, save ₹500 and invest it in index funds that give a return of 10-12% per annum.

 

Avoid Debt Traps: Kamath advises against unnecessary spending and borrowing and emphasizes the need to avoid debt and create an emergency fund.

 

Emergency Fund: Make it a priority to save six months' worth of expenses before investing. This cushion alleviates financial pressure and improves decision-making.

 

Health Insurance: Highlighted as an essential financial buffer against unforeseen medical bills, which can drain savings in no time.

 

Kamath's advice highlights the need to begin small and build regular financial habits to attain long-term wealth.

 

Source: Economic Times, Financial Express, Zerodha's Zero1