Wealth building is something that many people desire in India and across the globe, though only a few achieve the feat. The roadblock to wealth creation in India is probably not will, but the lack of right approach to investments. People believe that wealth building is a “get rich overnight” scheme, which is not the case given the fluctuating economy and volatile market conditions. Wealth creation in India is not a destination one can reach, rather it’s a path you need to traverse for years to accumulate the desired retirement fund or wealth. Continuing the discussion, the blog post discusses five strategies to incorporate in your wealth creation plans in India and elsewhere.
1. Focus On Diversifying Your Portfolio
When it comes to investments, avoid putting all your eggs in one basket. Doing so can put your financial future at risk as industrial revolutions come and go and you never know until what time a specific “industry bubble” is going to last. Invest your money in a range of financial products such as shares, mutual funds, bonds and bank FDs in different sectors. This one habit is certainly going to pay off. Once you have a diversified portfolio, you are in a position to get steady returns for years to come.
2. Believe in the Power of Long Term Investments
There is a good reason why it’s called “investment”, as it yields sizable returns in future. If you expect to get the profitable market ROI, you can’t expect your investments to boom and start showing results in three or say, five years. For investments to start yielding, you need to think about the broader picture, something similar as 10-15 years down the line. Wealth creation is a time-intensive process, therefore, you need to stop believing and investing in anything that promises four or five times returns in a limited period of 3-4 years as there is no such “get rich quick” scheme in the market.
3. Make Optimum Use of Tax Rebates
Paying income tax may feel frustrating at once, however, the rebates can help you in building long-term wealth in India. Tap potential sources in which you can invest and get a higher rate of interest. The key here is to invest more to get more returns without increasing the tax amount you need to pay. If, for instance, you are planning to invest in ULIP or endowment plans for tax rebates; switch to a PPF account or ELSS funds. By doing this, you will be able to make optimum use of your income tax exemption limit and still have a sizable portion of money left to invest.
4. Start Investing Early
Many people make the mistake of not investing until they feel the amount of investment is good enough to fetch desirable returns. Wealth creation in India or anywhere for that matter is a long term process. In other words, you need to start taking baby steps today to reach there tomorrow. Warren Buffett started this way and credits the investment success to his early start. In a nutshell, it goes without saying that to climb the wealth ladder, you need to start right now for achieving your financial goals. If you get stuck in two minds, consult a reliable financial planning firm and they will help you take more informed investment decisions.
5. Track Your Investments and Reassess Your Decisions
Though you should always look out for opportunities to diversify your investments, you also need to ensure that investment doesn’t end up as an expenditure. For that to happen, you need to pause at regular intervals and analyze your highest and lowest performing investments. Once you start the practice, you will get a better picture of promising investments to keep and drop the rest. Market conditions are volatile, therefore, always seek professional assistance from financial planning firms before deciding the future of investments.
The Bottom Line
Wealth creation in India or any other place for that matter requires more than wishful thinking. Whether you have a prior knowledge of investments or not, building wealth at once may appear a herculean task to you. Instead of taking amateur decisions, hiring a financial planner always pays off in the end. Once you have an expert working with you, there will be no guesswork and all your investment decisions will be aligned in the right direction through research and data.
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