Wealth is not created overnight! It requires financial discipline and lots of patience! Then only, wealth is created!
Wealth creation is done by following systematic approach to investing. You should fix a goal and have burning desire to achieve it. Then wealth creation has been done gradually!
- Invest according to your life stages– When you are young, you don’t have major financial responsibilities, You are a free bird at that time! But as you grow older you may have financial dependents and as a result so many financial responsibilities.
You should plan your investments at younger age as you have “Time” in hand. There would be no financial burden at that age. If you start investing early, you would experience the “power of compounding” duue to the time availability in hand.
But as you grow older, you can’t invest as much as in your 20’s. So start investing early. You should select investment avenues according to your life stages and goals.
- Make sure your family won’t suffer after your demise– As a bread winner you should take care of your loved ones. Their well-being is your responsiblity.
Even though you are earning sufficiently enough, no one would predict the future! Life is uncertain! Anything would be happen in future! The recent corona taught us the need of taking “Life Insurance” to protect your family from an unfortunate event.
Take “Term Insurance” up to 15-20 times of your annual salary.
- Why to take “Term insurance”– Term insurance is a pure risk coverage product with minimal premium when compared to endowment/whole life policies.
Term insurance offers high risk coverage in case of unfortunate event. The sum assured will be higher when compared to normal insurance policies and paid to nominee in case of demise of the bread-winner.
Online Term insurance policies are much cheaper but you should disclose genuine information of your personal, financial and health issues while taking term insurance to avoid claim rejection in future.
- Don’t be in favour of selected schemes– If an investor gets stellar returns in a particular asset class, generally he gets addicts to that asset class and invests continuoslyin that product. But this leads to wealth destruction.
Even though you are fond of one asset class, don’t invest all your corpus in that product. You should “Diversify” your investments to all asset classes. If one asset class under-performs, the other asset class will out-performs and gives you “Stable” returns without capital erosion.
- Redeem your investments only when you “Need the Money”– Some investors are over-excited when their investments are doing well and gets depressed when their investments turns red.
Due to “Over-Excitment” they invests more when the markets are in bull run and sell them when the markets are in bear phase. But actually this attitude is great obstacle to wealth creation.
Redeeming your investments due to panic would actually destroy your wealth. Instead stay calm during turbulent times and graually increase your investments.
Redeeming your investments thinking that your investments would go down in future and investing more thinking that markets would go up both should be avoided.
Redeem your investments only when you “Need the Money”! Whether it is a bull market or bear market, withdraw your investments only you need “Emergency Cash”