Maximize tax savings
up to ₹46,800 easily
0% commission • Earn upto 1.5% extra returns
We have a habit of dreaming big while we sleep. We want to buy/achieve so many things in life: a beach house, a BMW, or a piece of land on the moon. However, we begin to believe that accumulating such riches in our lifetime is unlikely, and we begin to compromise our aspirations.
True, wealth cannot be produced in a single day, but it is not difficult to accumulate wealth over time if one is consistent and disciplined in investing.
In this blog, we’ll explore a few steps you can take to construct wealth over time.
Step 1. Save smartly
Saving is the first step toward accumulating capital. When we say “save smartly,” we don’t mean “save whatever you have at the end of the month,” but rather “learn to plan your expenses in such a way that you can save the sum you want to save every month.”
The simplest way to do this is to set aside the money you want to save every month as soon as you get paid. With the remaining funds, you plan your monthly expenditures. Let’s say you have a monthly salary of Rs 1 lakh and save Rs 30,000 per month. To begin, set aside Rs 30,000 in savings or investments.
Step 2. SIPs enable you to turn your monthly savings into investments
Saving isn’t enough; channel your monthly savings into investments based on your financial needs.
Now, your investments must have a goal, and you must determine the goal’s tenure before choosing the appropriate investment method. This is not an impossible mission, but it must be done correctly. Here’s what you need to do.
You should specify your financial target, such as saving money for a holiday, a vehicle, or retirement, among other things.
Determine the investment tenure for each of your targets based on your objectives.
Third, choose the right mutual fund for your goal’s investment tenure and continue to invest in it monthly through a SIP.
Step 3. Increase your investment periodically
Since your income rises per year, your savings should rise as well. Also, as your income rises, your savings should grow in lockstep with it. If you get a 10% raise at the end of the first year, you can increase the proportion of investments by 10% in the second year. If you get a 20% raise at the end of the second year, your savings could increase by 20% in the third year.
Step 4. Invest lump sum whenever possible
Instead of splurging the whole amount when you collect a lump sum – such as a bonus or the maturity amount for an investment – invest a portion of it in your current mutual fund. Your money will grow faster in this manner, which will benefit you in two ways. Either you should meet your goal ahead of schedule, or if you want to keep the tenure unchanged, the amount you earn at maturity would be greater than the target amount.