Here’s a scenario for you.
You are 25 years old, and you decide to start investing ₹5,000 every month using SIPs, and continue doing this every month until you’re 60. So, for another 35 years. Just that tiny investment amount will accumulate over time, and at 60, you are set up to have a total amount of ₹1,91,41,384 with you. Over 1.9 crore – and do you know how much you have invested in the same time period? Just ₹21 lakhs. So, for a ₹21 lakh investment, you have created wealth valued at over ₹1.7 crores!
Are your minds exploding right about now? Good. This means we’ve got your attention as we dive into our topic for the day – wealth creation!
As a young investor, it is highly likely that your foray into the world of investing will start with something simple – like mutual funds. So, we thought we’d share some wealth creation tips with you today, that can help you realize important long-term goals for yourself. Keep in mind that while these aren’t necessarily rules of wealth creation, they are certainly important guidelines that need to be accounted for in your wealth creation plan, that you should definitely keep in mind as you start planning your investments for 2024!
(PS – Also… Avoid impulsive spending. As a rule!)
The bottom line is this – we all want to make decisions that can facilitate wealth creation. But without these six guidelines, wealth creation will remain a distant dream! So, make sure that any strategy you are adopting for wealth creation, especially using mutual funds, is rooted in these guidelines, allowing you to meet your long-term financial goals.
Wealth creation refers to the process of making money for important milestones in life, using the various investment instruments available to you in the financial market.
Some popular books that can educate you about wealth creation include – ‘Rich Dad, Poor Dad’ by Robert Kiyosaki, ‘Psychology of Money’ by Morgan Housel, and ‘The Millionaire Mind’ by Thomas J. Stanley.
You can use a simple SIP calculator online to chart your wealth creation trajectory over time.
SIPs leverage the rules of compounding and rupee cost averaging – both of which are useful tools in building wealth, if you are determined to stay invested for a long period of time.