Wealth creation is very important in today’s life. When u earn money, u need to save it properly and invest in such a way that your Money grows by itself. Below are the 5 Mantras of the wealth creations.
1. Insurance
Before making any investments, it is very important that you safe guard your earnings. You can only invest only if your earnings are continuous. To safe guard your earnings you have to insure yourself adequately. A person having a monthly income of 1 lakh per month should insure himself for at least 2.5 to 3 Crore. Insurance is required for 2 purposes. One is, if you die early, when your family is dependent on you or to be specific, they are dependent on your income. Secondly, you also need money for yourself, if you live longer. A guaranteed source of income for life time is necessary for your survival. I am sure you don’t want to depend on your Children for your survival. So get a good Term Insurance and don’t forget to add critical illness rider to it. Another very good option is Umang Policy from LIC of India or a similar policy from any other Life Insurance Company.
It is also very important to buy a good amount of Health Insurance. Take a good policy, even if your company is providing you a group Mediclaim policy. You never know when your company many stop the policy or after retirement, definitely you will not be covered. If you start thinking of buying a policy post retirement, then either you may have caught with some pre-existing diseases like sugar, BP etc. by that time and then getting a policy will be difficult. So buy a good Mediclaim policy immediately.
2. Mutual Funds/ SIP
Today investing in Markets are giving good returns, so it is very wise to invest a part of your income into Markets. The best options for investing in market are, Mutual funds. You can invest in lump sum or in monthly installments in the form of SIP. You have to have a long term vision for Mutual funds of at least 4 to 5 years. An average person needs money in his lifetime every 4 to 5 years. This amount may be required for many purposes such as buying a new car, down payment for a new house, international vacation etc. This is an important part of wealth creation. You should always first insure yourself adequately and then only start investing in mutual funds. Considering today’s market conditions, you should get a return anywhere between 12% to 20 %. Be wise, and take advice of an advisor only for investing in mutual funds. It is observed that those who invest directly without taking advice from an advisor, do not make much money. So you focus on earning your money and let the advisor guide u for mutual funds.
3. Property
I will also suggest that you create or invest in property also. If Possible, buy an extra house but remember to sell it when you get a good rate or value for your purchased house. The house where you currently stay should also be your owned house. Many Finance Experts will differ to my opinion, but I strongly believe that whenever possible invest in Property also.
4. Gold
Gold has tremendous value in our culture. We call it Lakshmi and it is another name for wealth. So when we are talking about wealth, we have to talk about Gold. I strongly suggest investing in Gold. At least you should buy a Gold ornament for your wife every birthday or anniversary. This will also help you in keeping the atmosphere at home very pleasant and remember when bad times comes, this Gold will give u good return and even your wife will not object. Over a period of 10 years the value of Gold will change drastically.
5. Equity
This is direct market investment and has to be done very cautiously and preferably only through an advisor. Equity investments should only be done after you have completed your investments task with Insurance, Mutual-funds, Gold and property.
Conclusion
When you do holistic investments in all the 5 segments mentioned above, you will create wealth for yourself and the generations to come. Every one like to leave a legacy behind for generations and what more that wealth can be a legacy.
All this will lead to a good amount of wealth creation which will eventually help you do your retirement planning. Remember, a 40 Year Person, needs at last Rs. 3 lakh per month after his retirement or when he turns 60. So ask yourself one question – Have you made provision for your 3 lakhs which u need after some years.
Happy Investing. Stay Healthy.
