What do you have on your vision board? Do you have long-term goals like buying your dream house, saving up a retirement fund, or financing your child's higher education? Or, do you have short-term and medium-term goals like buying a car?
No matter what you desire, having a wealth creation plan can bring you closer to achieving it. Wealth creation refers to building wealth through several financial products with the aim of gaining high returns over a period of time. How you create wealth depends on your financial knowledge and personal objectives.
In this article, we will discuss the importance of wealth creation, and how you can create wealth successfully.
Wealth creation is essential for the following reasons:
Each individual can have multiple objectives of wealth creation across different time horizons. Depending on these factors, you can pick a suitable strategy, like investing in fixed deposits, gold, or mutual funds online.
Additional Read: Simple Strategies to Build Wealth with Mutual Funds In 2022
What is the correct path for wealth generation? Mutual funds, fixed deposits, or stocks? Well, wealth creation strategies are not one-size-fits-all. They depend on your savings potential, financial goals, and risk appetite.
However, there are some best practices you must stick to throughout your plan. These are the ABCs of wealth creation:
Today, you have access to a wide variety of investment options. But, not all of them are the right fit for your wealth creation plan.
For example, say you are saving up for a short-term goal for the next 15 months. Now, you cannot do so with a high-risk instrument that can underperform in the short term and compromise the value of your invested amount. In this case, the safety of your money takes priority over your potential returns. The safest option here is to go with liquid funds or fixed deposits.
Conversely, if you want to save up for a house over the next five years, you can choose mutual funds for long term wealth creation.
Additional Read: Is ELSS a Wealth Creation & Tax-Saving Tool?
Remember that wealth creation is a continuous process. So, after you make a plan, follow it in a disciplined manner. Make the right choices with investment instruments, and you will succeed in creating wealth over time.
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