How to Build Wealth- A Journey of Wealth Creation

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How do people fund their retirement goals without earning at that time?  How can people travel to luxurious destinations of their choice?  How do parents send their children to the best colleges?  How do people buy expensive beach houses? Have you wondered about these questions?

Well, the answer to all of these questions is Wealth Creation. Wealth Creation is the gateway to living the life you have always imagined and being stress-free in the latter stage of your life. It is a long-term process that enables people to live without compromising their dreams.

Wealth Creation means the process of building wealth through various methods using modes of investments and several financial products. When money is invested in financial products for a long time, there is a possibility of earning high returns. Also, when these returns are reinvested, more wealth is created, owing to the power of compounding

Thus, Wealth Creation is an essential part of everyone’s life as it helps people in achieving their short-term and long-term goals and also brings them closer to living their dream life. However, one must understand that creating wealth is not an overnight process and it takes time to invest money and see it grow. It is a process that requires patience and discipline in terms of savings, budgeting, investing regularly, and having a long-term vision and mindset.

In this blog, we are going to discuss a few steps on how to create a wealth plan and build wealth over a certain period.

Importance of Wealth Creation

  1. The wealth generated over the years provides a stable flow of income, when one retires or is no longer employed or working. Thus, it enhances financial liquidity and provides a sense of financial security.
  2. Wealth Creation also helps in times of financial emergencies like severe medical conditions, house repairs, car repairs or other contingencies that may arise from time to time.
  3. The goal of Wealth Creation instills a sense of discipline in individuals and they start saving and thus, their future becomes stress-free. People also get to use enough funds through which they can live the life they have imagined. 
  4. Wealth Creation helps in the fulfillment of goals like buying a property, traveling and children’s education.

How to Build Wealth?

Here are a few measures that can be used to get closer to Wealth Creation and make your journey of building wealth easier-

Create a Budget and Follow it religiously budget refers to a financial plan for a specific period that consists of estimated income and expenditures for that period.

Many people generally fail to make a budget in the first place and even if they do so, they do not stick to it. However, creating a budget is an unmissable step in the journey of building wealth and Wealth Creation as a whole. 

A budget helps you to take control of how you are spending your money and how much amount you can spare for your savings (and consequently investing). Thus, not making a budget can become a major setback for your financial journey as it can lead to unnecessary spending, irregular savings, and incurring avoidable costs. 

So, if your plan is Wealth Creation, Take the First Step Today- Create a Budget!

1. Be Smart with your Savings

One of the primary steps that help in Wealth Creation is savings. Saving smartly essentially means learning to manage your expenses in a well-defined manner so that you can save a specific amount at specific intervals. The easiest way to do this is by setting aside some money that you decide to save every month and spending the remaining amount on your daily needs, household expenses, maintenance and various other expenses.

This requires discipline and regularity in parking your funds so that you can witness their growth in the future years.

2. Consistency is the Key to Wealth Creation

Being consistent in your savings plays a key role in enhancing your Wealth Creation process. So, you must remember to save periodically. It could be fortnightly, monthly, quarterly, half-yearly or yearly, depending on your goals and the amount that you can set aside. 

If you are consistent, you will see a visible difference in your wealth and in the long run, you will see substantial wealth generated for you to live a stress-free retirement life or spend money in the manner that you desire. Regular savings and investments also save you from the burden of spending money in times of emergencies. 

Many people have attained the goals of early retirement or have stopped working for others by saving and investing consistently.

3. Increase your Investments Periodically

Once you have started saving, the next step is to start investing and once you have started investing, you must ensure that your investments also increase every year. Think of it this way – your salary increases every year; you receive a festive bonus or you are earning from your freelance work. So, why not invest the extra earnings instead of spending them in the present?

Also, ensure Diversification in your Investment Portfolio by making Investments through various avenues like stocks, bonds, mutual funds, ETFs, commodities, etc. 

Imagine a scenario where you get a 10% increment at the end of the year, then in the next year, you should also increase the proportion of your investments by 10%. Similarly, if by the end of the second year, you get an increment of 20%, then in the third year, your investments should rise by 20%. By doing this, you will see a significant increase in your wealth over the years.

The best way to do this is to invest in lumpsum whenever possible, automate your savings or give your SIP a top-up at regular time intervals.

If your goal is Wealth Creation through proper planning and strategy or you need help investing in your future, connect with mastertrust. Our professional advisory services will make investing, saving, and budgeting easy for you, while you ensure that you build wealth to attain your future goals.