Never miss a great news story!
Get instant notifications from Economic Times
AllowNot now


You can switch off notifications anytime using browser settings.
11,971.8061.65
Stock Analysis, IPO, Mutual Funds, Bonds & More

How to get rich? 5 sure-shot ways to create serious wealth that you always ignore

It is crucial for investors to make financially responsible decisions early in life.

, ETMarkets.com|
Updated: Apr 21, 2018, 12.01 PM IST
0Comments
ThinkStock Photos
moneylotsof--TS
We, too, can achieve our financial targets by investing regularly,
Wealth creation is tough. But taking the right steps – no matter how little they are – can make it easy and help you go the distance.

Cut to school days. Remember the story of the Thirsty Crow? It didn’t take the bird much time to realise that dropping small pebbles one by one into the pot can bring the water level up and help it quench thirst. What seemed highly improbable at one point became a reality in no time!

The crow analogy has a lesson for us. We, too, can achieve our financial targets by investing regularly, understanding financial tools and balancing the debt, savings and expenditure mix.

These five tips can come in handy in creating long-term wealth. Check out.

Early bird catches the worm

We have been taught our whole life that money begets money. Contrary to popular belief, building wealth from scratch is not unachievable. Ramesh Bukka, co-founder and Director, Entrust Family Office Investment Advisors, said: “Investors need to start saving early in their life, so that savings have a longer runway to grow. A steady kitty of savings needs to be invested periodically by keeping expenses as low as possible for as long as possible, along with building additional streams of income.”

Investing early in life along with benefits of compounding is a well-proven strategy to strike it rich. “Compounding, essentially basically elementary school maths, is a miracle that can transform small consistent savings into major wealth in one’s lifetime,” Bukka said.

Invest your time

It is crucial for investors to make financially responsible decisions early in life. Exposure to savings, expenses, budgeting and investing at an early age can equip savers to take informed decisions for a financially secure future.

“Three-fourths of all adults in India do not understand basic financial concepts and this eventually leads to poor investment decision making. Understanding investment basics is critical, particularly for young people who are early in their career. While good decisions increase potential to grow capital, any wrong decisions or indecision can hamper long-term financial success. Spending two hours a week to read and build skills and knowledge for taking informed and effective money management decisions will go a long way in helping build wealth,” says Bukka.

Financial literacy, ultimately, will lead to financial stability for investors.

Fix a goalpost

The young nowadays end up taking up more and more loans as and when their incomes start rising. Debt, if not managed well, is quicksand that can ruin your dreams. One large component of credit taken by individuals goes into buying their homes. While this is important and aspirational, the stage of their life at which they purchase a home will have a large impact on end-finances when they retire.

Laying out specific money and savings goals can help curb the temptations of taking credit. In addition, investors should pen down realistic goals for their net worth and revisit them from time to time. Automating finances wherever possible will help. SIPs by way of auto debit at the beginning of the month are a tried and tested tool for long-term wealth creation.

Abhishake Mathur, Senior Vice President, ICICI Securities, said a good financial plan can pave the way forward to meet one’s life goals. A plan covers key questions like how much investments are required for each goal and how much to invest in an asset class (equity or debt).

Yet to make a detailed plan? Worry not. Analysts say one can at least have an investment target. Invest before you start to spend from your monthly income.

Make your job work

Employee provident fund (EPF) is fine. But on top of that, if your employer offers NPS or superannuation schemes, do subscribe to them, say experts. Retirement funds impact immediate liquidity, but can secure one's retirement.

The equity route

Investing in equity through mutual funds or even directly in shares is a good way to benefit from the power of compounding. “Equity investment may be volatile in the short term, but most suited for long-term goals. Equity as an asset class have given best inflation adjusted returns over a long period of time,” says Mathur.


Comments
Add Your Comments
Commenting feature is disabled in your country/region.
Download The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.

Other useful Links


Follow us on


Download et app


Copyright © 2019 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service