What is a Wealth Accumulation Calculator and What does it tell you?
Wealth accumulation is one of the most satisfactory uses of the money you have at present aside from spending it. Financial discipline over long-term is the foundation of wealth accumulation and a secure financial future.
Say, you are 30 now and you have another 30 years to invest towards retirement. To accumulate wealth for retirement, you need to decide for how long you want to receive the annuities from the plan. Say, you want to receive an annuity of Rs. 50,000 for a period of 30 years – up to age 90 – (50,000*30*12), you need to calculate how much you must invest as a corpus at the rate of the current interest. This is where a wealth accumulation calculator can help you.
Other than a comprehensive financial plan, there is no shortcut to secure a comfortable financial future. Whether you aspire to spend your golden years travelling and catching up with your peers or to enjoy a well-deserved respite with your loved ones, financial planning is all about having the freedom to chase your dreams without worrying about money. Financial planning will prepare you for any emergency (that money can solve) and give you peace that even if something unfortunate happens to you, your family will not suffer.
Points to consider while financial planning
Start NOW – Whether you have just started working or think you have ample time, please stop procrastinating when it comes to investing. Early and consistent planning can make a big difference to your financial future.
Analyze your current financial situation – Do you have your insurances (medical, vehicle or life insurance) in place? Are you able to put aside a certain amount regularly after expenses? Do you have a plan B for emergency situations? What about outstanding loans and dues, if any? Answers to these can help you analyze this.
Eliminate debts – Nothing gives the financially conscientious a bigger nightmare than debts. With credit card companies, banks and NBFCs issuing unsecured loans to people from all income class, people rely a lot on instant loans to take care of their immediate needs. This has to change. Start by paying off a little more than required and close the debts at the earliest.
To save tax or to build wealth – You must focus on a diversified investment portfolio that can do both – then only you can accumulate wealth. Do you know which tax slab you belong to and what are the legal options (including 80C deductions) you have to save tax?
Allocate assets wisely – When you choose assets to invest in, understand the purpose of the particular product. For instance, if you balance your equity investments with debt funds or a safer financial tool like FD, it can spread the risks. Balancing is a key step to wealth accumulation.