How to Build Wealth - Simple Steps you should follow to Generate Wealth
Who doesn’t want to be wealthy? The financial security that comes with being wealthy ensures that your financial goals are taken care of and that you can face any challenge that life throws your way.
How do you become wealthy? Do you earn more or do you save more?
Confused? Don’t be. Wealth creation is not a tricky task once you know how you can do it. So, here are some simple steps to build your wealth, effectively –
- Cut down on unnecessary expenses
Remember the saying a penny saved is a penny earned? It is a simple principle of wealth creation. If you reduce your expenses, your disposable income (savings) would increase. Increased savings would, then, allow you to invest more. As your investment grows, so does your wealth. The math is simple.
So, cut down on unnecessary expenses as they can disrupt your budget and hamper your savings. If your savings are hampered, you would not be able to invest much for wealth generation. So, to start your wealth creation journey, the first step is to put an end to dispensable expenses.
- Be disciplined with your investments
Jim Rohn said, ‘we must all suffer one of two things: the pain of discipline or the pain of regret’. He couldn’t have been more right. For your investments to grow and generate wealth, you need to have a disciplined approach to investing. Investing sporadically or randomly does not yield results. You need to follow a systematic investment approach and put aside money regularly if you want your portfolio to grow. As such, disciplined investment is the key.
Choose saving schemes wherein you can invest every month. This would ensure affordable savings and if you remain disciplined in your approach, compound interest would increase your investment exponentially. So, start putting aside your savings every month in a disciplined manner. If you are worried about your expenses, invest first and spend later. This would ensure that your expenses don’t dictate your investments and you invest regularly to build up a corpus.
- Give your investments time
Rome was not built in a day. Neither can you become wealthy instantly. Wealth creation needs patience. So, when you invest, opt for a long-term horizon. This would be beneficial on three fronts –
- One, you can get exponential returns through the magic of compounding
- Two, even small amounts, saved over a long-term horizon, would create a considerable corpus
- Three, if you have invested in the equity market, the risks would smoothen out over time giving you attractive returns
So, time can, quite literally, turn to wealth if you are patient with your investments. Take this example for instance – if you save Rs.5000 every month in a savings plan and you keep investing for 10 years, you can earn a corpus of Rs.9.15 lakhs at a conservative interest rate of 8%. Increase the tenure to 15 years and the corpus grows to Rs.17.30 lakhs. Just a 5 year jump in time and the corpus almost doubles! This is the magic of time!
- Be smart when choosing investment schemes
While investments are important for wealth creation, picking the best investment options is also essential. If you choose the best investment options, you can earn maximum returns on your investment and create a considerable corpus.
What are the best investment options then?
Well, the choice of a savings plan depends on your financial goals, investment horizon and preferences. You can invest in guaranteed return investment schemes if you are averse to market risks. Such investment schemes offer a guaranteed rate of interest on your savings. Alternatively, if you want to participate in the market, you can opt for market-linked investment schemes, like ULIPs. In fact, with the ULIPs offered by Aviva, you can invest in different types of funds based on your risk appetite. Aviva’s ULIPs also give you tax benefits and can be one of the best investment options for your portfolio.
- Get insured
Lastly, get insured. If you are wondering how insurance helps in wealth creation, the answer is through financial security. Life is uncertain. When you think everything is going smooth, an emergency can strike you out of the blue. Emergencies not only cause an emotional upheaval, they are financially challenging too. You might need considerable funds to face the emergencies and this is where insurance helps.
Life insurance plans cover the risk of premature death and help you secure your family’s finances in your absence. Health insurance plans, on the other hand, cover your medical expenses and prove useful in medical emergencies. They ensure that the wealth you create remains secured in unforeseen situations and are, thus, important.
Aviva offers some of the best insurance solutions for your financial needs. Explore the available plans and choose suitable options to secure your wealth.
Follow these simple steps and you would be surprised how simple wealth creation proves to be. Build your wealth and then secure it with suitable insurance plans. This would not only help you to grow your wealth but also preserve it.