Secrets of Wealth Creation

25 Jan 2021

Cara Osbourne-De Medici is a California based young teacher. To secure her future, she decided to start investing. But she was perplexed with several savings scheme, available in the US market. On the one hand, she was asking the fund managers for high returns, and on another side, she was not going for high risk. Like Ms. Cara, many people need proper guidance for high returns investment.

Cara was fond of reading articles online. She browsed, learned, and took personal finance management services. Her investment basket consisted of a mixture of mutual funds, equities (stock market), fixed deposits, provident funds, savings accounts, government schemes.), retirement schemes, etc. When you are young, you can take risks and invest in instruments that can provide you high returns in less time. But as you proceed ahead in career and life, it becomes imperative for you to invest wisely in creating wealth for the lifetime.

A North-western Mutual’s 2018 Planning & Progress Study was conducted on 2003 American adults. The inference is 21% people have saved nothing at all, and 10% have saved less than USD 5000. Maybe they rely on social security payouts, but they need a robust plan for wealth creation.

Are you done with your research and planning?

Yes. Ideally, a person should start saving and investing in long-term wealth creation at the start of his career. It is a well-said proverb that early bird catches the worm. But it is also true that it is never too late. But before investing, you should carry extensive research on different types of financial instruments available.

You should take into account your age, salary, credits, future of your service, etc. among various other points while conducting your research. You can work on the advice of others, but it is worth noting that you are the only one who knows your actual financial conditions. Thus, if you carry out the research work on yourself and plan accordingly, you can make the most of it.

Have you set up your financial goals?

When you conduct your research, it is essential to understand that what your financial goals should be. You should make realistic and achievable goals. Ensure that your goals are divided into short-term and long-term goals. Setting up of milestones in this journey helps in keeping track of the rate at which you are moving towards your goals.

Some typical examples of financial concerns can be – the retirement corpus, funds for your child’s education, the size of your home at the time of retirement, etc. You can set a specific amount for each requirement and try to get as close to it as possible. If it is too easy to reach the goals set, then it means you can push yourself further. But you should also keep it in mind that you do not set an unrealistic target because it will put you under severe financial pressure.

What is in your investment basket?

When you plan for long-term wealth creation, you primarily select those options that are safer in the long run and have been stable for over sometime. However, if you settle only for reliable options, you will end up having a relatively lesser corpus in the end. It is always suggested that you have a diversified basket of investment. Your investment basket should consist of a mixture of various investment instruments such as mutual funds, equities (stock market), fixed deposits, provident funds, savings accounts, government schemes (such as PPF, NPS, SCSS, MIS, KVP, etc.), retirement schemes, etc.

It is also noteworthy that you invest a substantial part of your corpus in rising real estates. The immovable property becomes your asset when you retire from your job. It should also find a place in your investment basket.

Are you determined to make investments regularly?

Once you have made the resolution, the onus is on you to make it happen. Researching, planning and setting up goals is only a small part of the mammoth task. The most important part of long-term wealth creation is that how disciplined you are towards your self-goals. If you are true to your investment resolution, you will certainly reach your goals on time and have a sound retirement. But if you fail while contributing, you should aim to chase your decisions.

Do you have emergency funds?

Whatever be your goals, always make space for emergency funds. Life is not a cakewalk, and you may come across situations when you need money urgently. The urgency can be a medical emergency, financial obligations, unwarranted spending, etc. If you take the money out from your funds, it may put a huge financial strain on you. But if you have already kept a part of your corpus as emergency funds, you can use them and move smoothly towards your financial goals. However, you should also keep in mind that the emergency funds should be used only in case of emergency and not as liquid funds.

We all want to secure our future. Build the wealth and lead the life you dreamed of even in your golden old days.  Grow your wealth and invest at the right place with Afinoz LLC.