1. Set a financial target for yourself 2. Create a solid financial strategy 3. Place a premium on saving. 4. Start Investing 6. Tax Planning
How do you build long-term wealth? I’m sure, a lot of you would be interested. Well, let’s begin with - What exactly is wealth? In simple terms, wealth means having a large sum of money, property, or other valuable items. Now Let's first understand the difference Between Rich & Wealthy. One can be rich for a short period of time. You can become rich by winning a lottery, by earning as a professional athlete or entertainer or may earn as a professional or business owner. But the money will be gone once your earning power is gone. And It won't be passed on to the future generations. But a wealthy person has sustainable wealth. In fact, Wealthy people know how to make money. You know what..The key to wealth is knowledge and consistency. If you do have knowledge and consistency, you can build sustainable wealth. Otherwise, you do happen to get rich but the money is not likely to last. So, How do you build Wealth? Well, that's a million dollar question, isn't it?
So now, let's take a look at some long-term wealth-building strategies.
1. Set a financial target for yourself
Your goals must be specific and measurable. Make a list of your goals that will serve as a daily reminder to you to achieve them. Your goal could be to buy a house, fund your children's education, buy a car, or go on a world tour. Just remember, Planning ahead of time ensures that you have enough time to meet your financial goal.
2. Create a solid financial strategy
Once you've decided on a financial goal, it is critical to have a financial plan in place. It gives you a well-defined path to follow to achieve your life's goals. A budget plan assists you in managing your finances by keeping track of your taxes, expenditures, and savings. And This, in essence, helps you in reaching your goals.
3. Place a premium on saving.
How much money should I set aside? Some say 30% of one's salary, while others say 50%. Well, that depends on your goals. But certainly, saving systematically can help you avoid many pitfalls and obstacles in life.
4. Start Investing
Savings alone will not suffice. You must begin investing. Once you have a financial plan in place and have saved enough money, you should start investing; Now, choosing the right mix of investments is critical. Investing too much or too little in a single asset can cause liquidity issues. There are many options available for investment such as Mutual funds, gold, real estate, bonds, stocks, fixed deposits etc. You know Putting you money into mutual funds can be a great way to accumulate wealth over time. It allows you to build a solid portfolio in a matter of years. It is also easy to manage as the research and selection of the best securities is done by the fund manager. It is simple to purchase as well because there are numerous safe platforms available these days. And In order to avoid risk, You can choose one good large cap and one good mid cap fund. Two good fund can give you an exposure to a lot of good companies from each segment. And, In the long run it will definitely grow as you easily expect growth in the top 50 companies of India. In addition to these investment, having an emergency fund as well as life and medical insurance is a must. And if you want old age income, NPS(National Pension System) is a great way to invest for your retirement. As of now, an investment of 50,000 Rs/- a year in NPS also gives your tax benefits.
6. Tax Planning
Isn't it true that the more you earn, the more taxes you must pay? No, not necessarily. Remember, Tax planning should not be put off until the last minute. To save tax, one can opt for an equity-linked savings scheme (ELSS). It offers the dual benefit of tax savings as well as the potential for higher returns than traditional tax-saving options such as Public Provident Fund, National Provident Scheme, and Fixed Deposit. ELSS has the shortest lock-in period of three years, and gains are tax-free up to Rs One lakh. However, you must know, because ELSS is linked to equity, there is a high level of risk involved. If you are not willing to take risks, you can choose low-risk investments such as FDs, PPF, and so on.
Well guys, we've seen some strategies to grow your money, but remember, in order to grow your wealth; you must have a long-term plan. Short-term plans will not give the desired results. Also, make sure you invest in yourself. That is the wisest investment you can make. Take some time to unwind and recharge your batteries. Make it a habit to improve and upgrade yourself both in terms of skills and spirit. This will help you figure out better ways to accumulate wealth.