Start To Build Wealth At The Earliest
“The person who doesn’t know where his next Rupee is coming from usually doesn’t know where his last Rupee went.” A beautiful quote that reminds us the need to build wealth to reap the best of the riches this world has to offer.
Building wealth is not an impossible task but also not a path laden with roses. It takes patience and smart planning to accumulate wealth. Here’s how the age old process followed by everyone all around the world make use of to build their wealth.
The obvious way
Complete your education, get a job and start earning. A college degree ensures financial security, however history is laden with examples of people with no education reaching great heights through their mere will and passion.
If a college degree or formal education is not feasible then one should try and enhance one’s skills by taking relevant training courses in an area of interest. Those already employed in an organization can get certified in add on courses and become an indispensible part of the organization. Also, chose a company that offer perks such as EPFO, medical insurance, etc.
Regardless of personal plans, it is always advisable to start building wealth early on. For example, if a student joins a new organization after graduation with a plan to quit after a year to pursue further education, it is still recommended that he/she starts building wealth from the first month onwards.
Set financial goals
Financial goals can be ultra-long term or for a short duration. Goals can vary for different people at different times – buying a home, buying a second house, life events, dream vacation, retirement, a target of 1 cr. in the bank etc.
When it comes to setting goals it is best if the following points are followed: –
- Set realistic goals
- Have plan and patience
- Understand the time frames
- Things may change, times may change, be open to adapt
These four steps are followed by all investors who have accumulated wealth over a period of time.
Budget all monthly inflows
Every single paisa that you earn has to be accounted for. Youngsters have the habit of splurging their income on redundant commodities or on parties. Now we won’t admonish your personal choices but we will still emphasize the need to keep counting the income and expense.
While setting a budget a large portion should be set aside for saving (many wealth advisors advice that more than 25% of the income to be set aside for wealth creation). If initially this per cent seems humungous then it is alright to start with a lower figure, provide it is increased cumulatively.
Invest Early and Habitually
The most important step after earning and saving is investing. The interest rates returned by a bank account is way too less to build wealth. The excess amount in savings needs to be diversified into investible vehicles that give high ROI. Mutual funds, stocks, PPFs, NCDs, P2P lending, etc. are some reliable methods to build wealth and save tax. Even after making an investment there are a few pointers to keep in mind:
- The profits should always be reinvested to get the benefit of compounding.
- Diversify investment portfolio across different investment vehicles.
- Stay invested for a long time.
Reshuffle goals periodically
As one gains experience in the professional world and gets salary increment it is important to revisit the portfolio and rebalance it. It is also important to stay away from debt traps of loans and credit cards. Adequate resources should also be used to buy a good life and medical insurance policies.
Starting early with unparalleled discipline is imperative to build wealth in the long term. So start investing at the earliest.